About the EM Depreciation Processing Form
Use this form to post depreciation monthly, quarterly, yearly, or on whatever cycle you choose for a single asset or all assets.
You can post depreciation only for assets that have been set up and have calculated schedules in the EM Asset Setup form.
The depreciation process uses the asset’s ‘Amount to Take’ and ‘Amount Taken’ values (in EM Asset Setup > Schedule tab) to determine the depreciation amount for that asset and updates the amount as the ‘Amount Taken’ for the current month. Depreciation transactions are stored in the EM Cost Detail table (EMCD). Until you post the depreciation batch, you can access and edit the transactions in EM Cost Adjustments; however, there is usually no reason to do.
Before You Begin
Prior to posting depreciation for the first time, assign the Depreciation Cost Code and the Depreciation Cost Type (in EM Company Parameters) to assign to each depreciation cost entry.
Additionally, you must set the Last Month Calculated field (in EM Company Parameters) before you can begin posting depreciation. The system uses this month to calculate the correct depreciation amount to post. After the initial setup, the system will update this field automatically each time you run the depreciation process.
Inactive Equipment
If you are running depreciation for a specific piece of equipment, and that piece of equipment is flagged as 'Inactive' (in EM Equipment), you will receive a message informing you that the equipment is inactive, but you will be allowed to proceed with the depreciation process. If you are running depreciation for all equipment, the system will not display the warning message for inactive equipment; it will just proceed with the depreciation process.
Depreciation Calculation
The system uses depreciation scheduling information set up in EM Asset Setup to determine how much depreciation to post. Calculations are based on the scheduled ‘Amount to Take’ for that year through the current month and the ‘Amount Taken’ to-date for that year through the current month.
The amount taken-to-date is subtracted from the scheduled ‘Amount to Take’, and the result entered in the ‘Amount Taken’ for the current month. For example, assume you are posting depreciation on a monthly basis:
EM Asset Setup: Total Amt to Depreciate: $1200.00
EM Depreciation Processing: Posting Date: 03/13
Month | Amount to Take | Amount Taken | Balance |
|---|---|---|---|
01/13 | 100.00 | 100.00 | 0.00 |
02/13 | 100.00 | 100.00 | 0.00 |
03/13 | 100.00 | 0.00 | 100.00 |
The total ‘Amount to Take’ through current month (03/13) is $300.00. The total ‘Amount Taken’ for the year through 03/13 is $200.00. The remaining balance of $100.00 is posted to 03/13 in the ‘Amount Taken’ column.
When to Run
It is not necessary to run depreciation calculations every month. At a minimum, you must calculate through the 12th period of your year before you can close that period and before you can post any depreciation to the next year. Whenever you run this program, the process will calculate enough depreciation to bring the asset current and post the amount to the current month.
For example, if you last ran it through period 03/12 and you now run for period 06/13, three months of depreciation will be calculated and posted to period 06/13:
EM Asset Setup
Total Amt to Depreciate: $1200.00
Amount Taken (to-date): $ 300.00
EM Depreciation Processing
Posting Date: 06/13
Month | Amount to Take | Amount Taken | Balance |
|---|---|---|---|
01/13 | 100.00 | 100.00 | 0.00 |
02/13 | 100.00 | 100.00 | 0.00 |
03/13 | 100.00 | 100.00 | 0.00 |
04/13 | 100.00 | 0.00 | 100.00 |
05/13 | 100.00 | 0.00 | 100.00 |
06/13 | 100.00 | 300.00 | 200.00 |
You can set the Calculations Required option in EM Company Parameters to ‘Monthly’ if you want the system to restrict you from closing a period until you have run EM Depreciation Processing.
Recalculating a Month
Rerunning this program for the same month will not double up depreciation, but will correct for any schedule changes made since the first run. For example, after posting depreciation for month 06/08 (as shown in above example), you find you must change the asset’s life (# of month’s to depreciate). This causes the asset’s Amount to Take value to change when you recalculate its schedule.
EM Asset Setup:
Before | After Recalc | |
|---|---|---|
To Take | $1,200.00 | $2,000.00 |
Taken To Date | 600.00 | 600.00 |
For example:
If month 06/13 (June 2013) = 6/12 (six twelfths) of year, the system calculates what 6/12 of the annual total ‘to take’ amount should be ($1000). It then looks at how much of that has already been taken to-date ($600) and creates another entry to post the difference ($400) to bring the Amount Taken to-date to $1000.
As you can see from the above example, if you rerun a month in EM Depreciation Processing and the asset’s scheduled amount has increased, then EM Depreciation Processing will post the amount needed to catch up. If instead, the asset’s scheduled amount has decreased, it will post a negative amount to catch up. If the asset’s scheduled amount has not changed, then rerunning EM Depreciation Processing for the same month will result in no additional depreciation posting.
GL Account Posting
Posting depreciation has the following General Ledger effect:
Debits the GL account assigned (in EM Departments) to the Depreciation Cost Type designated in EM Company Parameters.
Credits the Accumulated Depreciation GL Account defined in EM Departments.
You can override these accounts in the EM Asset Setup if necessary.
