Depreciation—Key Exercises

Basic Data Setup

Purpose: The purpose of this exercise is to show you how to set up the basic data required for creating depreciation transactions. This exercise contains links to two other basic data exercises covering general ledger and fixed-asset subledger transactions. If you have already completed the setup for IFS Accounting Rules and IFS/Fixed Assets, you can skip these basic data exercises and continue with the lesson.

Preparations in IFS Accounting Rules 
Preparations in IFS/Fixed Assets

Required Data

To be able to run the Depreciation According to Plan exercise, you must have performed the exercises in the following lesson:

Acquisition

Main Exercises

Depreciation According to Plan

Purpose: The purpose of this exercise is to show you how to create, authorize, post depreciation proposals, and create partial depreciation proposals. In doing so, you will post transactions to the general ledger. Depreciation can be charged simultaneously for multiple object groups. During this exercise, you will check the depreciation posting types, create depreciation proposals for your machines, authorize and post the proposal, and then check the transactions in query windows.

Windows:
Posting Control
Depreciation Proposal
Object Transactions Analysis
Object Balances Analysis

Create Depreciation Proposal

Windows:
Posting Control

1. Open the Posting Control window, and check Posting Types FAP5 and FAP6.
2. Make any necessary changes, and save them.

Note: FAP5 is for cost accounting (depreciation expense) and FAP6 is for balance accounting for depreciation (accumulated depreciation).

Windows:
Depreciation Proposal

1. Right-click and then click Create Depreciation Proposal.

2. Create a depreciation proposal for the object group 10, Machines as described in the table below.

3. Object Selection Based On	Object Group	Book	Depreciation Year	Depreciation Period	Proposal Description
   Click on Object Group	Your machine object group e.g. 10	Your general ledger	Enter the current year	Enter the current period	Enter a description of the proposal

4. Note: You can only depreciate one year at time.

5. Click OK. The depreciation proposal is created, and the depreciation lines are displayed.
6. Authorize the depreciation proposal by right-clicking and then clicking Authorize Depreciation Proposal. The status of your proposal is changed to Authorized.
7. Post the depreciation proposal by right-clicking and then clicking Post Depreciation Proposal. Specify the voucher date. The status of your proposal changes to Posted.
8. Click OK.

Note: A voucher is created and transferred to the hold table in IFS Accounting Rules. If the  proposal is incorrect, you can cancel it. Once the proposal has been posted, it can be rolled back if necessary.

Queries

Windows:
Object Transactions Analysis
Object Balances Analysis

1. Open the Object Transactions Analysis and Object Balances Analysis windows. You can use these queries to view information about the depreciation transactions and object balances..

2. Open the Vouchers Analysis window. View the depreciation voucher that was created and that is in the hold table..

Create a Partial Depreciation Proposal During a Period

Windows:
Posting Control
Depreciation Proposal

1. Click the Books tab, right-click on a data line and then click Depreciate.

2. Enter the date up to which the object has to be depreciated (e.g., the 15th of the next period). The From Date (i.e., the day after the thru date ) and the Until Date must be of the same period.

3. Enter a description for the proposal and click OK.
   A partial depreciation proposal will be created; note down the proposal number.

4. Open the Depreciation Proposal window and query for the above proposal number or populate the window and select the very latest proposal number..

5. The depreciation line is displayed, and you can see that the depreciation is calculated for 15 days.

6. Authorize and post the partial depreciation proposal.

7. You can create another partial depreciation proposal from the 16th to the last date of the next period.

Depreciation According to Tax

Purpose: The purpose of this exercise is to show you how to create a depreciation method for declining depreciation and to create a depreciation proposal for depreciation that will stay in the fixed assets subledger. No transactions will be posted to the general ledger. These transactions will be available only through fixed-asset queries and reports.

In this exercise, you will create a depreciation method for declining depreciation. The depreciation method factor is 30% of the object's net value at the beginning of the financial year. The object is acquired during the second half of the financial year. Depreciation for the first year will be calculated for half a year. The estimated life is 5 years. There will be a switch from declining to remaining value/remaining months depreciation as soon as straight-line depreciation is higher (this will be covered in the Switch Depreciation Method exercise).

Windows:
Depreciation Method
Object
Voucher Entry
Depreciation Proposal
Object Transactions Analysis
Object Balances Analysis

Create a New Depreciation Method

Windows:
Depreciation Method

The following information has to be defined for a new Depreciation Method:

1. Open the Depreciation Method window.

2. Enter a new depreciation method with the ID DB 30 BY and with the description Declining Balance, 30%, Beginning of Year.

3. Enter the following information in the appropriate fields and save.

Note: If needed, use the Depreciation Method created by default and/or the user documentation where all drill-down menus, and others, are described.

Enter Object

Windows:
Object

1. Open the Object window, and create your seventh machine according to the information below.

    2.    Enter other object information, location, etc.
    3.    Save.
    4.    Change the Object Status to Investment.  

Distribute Depreciations

Purpose: To distribute the Cost Postings, FAP5 to several Code Strings, usually divided by Cost Center.

Windows:
Object

1. Select the Pre-Posting tab.
2. Select Cost Center from the List of Values as the Code Part .
3. Enter a cost center created previously  in the Code Part Value column and enter 50 as the Percentage .
4. Create another row and enter another cost center in the Code Part Value column and enter 50 as the Percentage.
5. Create the Depreciation Proposal. Refer to the Depreciation Proposal exercise.

Windows:
Voucher Entry

Enter the acquisition value of 100,000 (accounting curr.) via manual voucher for the objects entered above. In the code part for objects, specify the identity of the object. The acquisition date is during the second half of the financial year (I.e. xxxx-07-01). Post the voucher.

1. Open the Voucher Entry window.
2. Create a manual voucher and enter an acquisition value of 100,000 for your seventh machine.
3. In the code part for objects, specify the ID of your machine. Post the voucher to the general ledger by using the right mouse button menu options.

Windows:
Object

1. Return to the Object window, and change the object status to Active.
2. Go to Books tab, and populate it.
3. Create a new record and enter the book Tax if it is not already entered and select the depreciation method DB 30 BY from the List of Values for the Depreciation Method field. Enter 05y 00m in the Estimated Life field to indicate an estimated life of 5 years.
4. Delete all other books created by default for the object/object group.
5. Save.

Create the Depreciation Proposal

Windows:
Depreciation Proposal

1. Open the Depreciation Proposal window.
2. Right-click and then click Create Depreciation Proposal.
3. Enter a depreciation proposal for the object MX (created in the previous exercise) with the following details in the appropriate fields.
    

   Object Selection Based On	Object	Book	Depreciation Year	Depreciation Period	Proposal Description
   Object	MX	TAX	Enter the date on which the object was acquired.	12	Enter a description of the proposal

4. Once you have made any necessary changes to the depreciation proposal, authorize the proposal and post it. Once the proposal is posted, the object will be depreciated for the first financial year.

Queries

Windows:
Object Transactions Analysis
Object Balances Analysis

1. Open the Object Transactions Analysis window. You can use this window to view the transactions created for your machine.e.

2. Open the Object Balances Analysis window. You can use this window to view the new net book value for your machine.

Windows:
Voucher Entry

1. Find information on the voucher in the hold table. 
2. Make sure that the posting controls have been defined correctly. 
3. Compare with the set-ups for posting controls as above.

Switch Depreciation Method

Purpose: The purpose of this exercise is to show you how to create, authorize, and post depreciation proposals for all remaining years of the asset's life. Only one year of depreciation can be posted at a time, so five additional proposals will be created. When all proposals have been posted, you will be able to view the calculated depreciation for all years.

The depreciation method above was set up so that the switch in depreciation methods can take place when optimal. The system will automatically switch the depreciation method to the Remaining Value/Remaining Months method when it provides the higher amount of depreciation. This means that the system calculates the remaining value of the asset and divides the amount by the remaining months of the asset (straight-line calculation of the remaining amount).

Use the asset created in the previous exercise. It should have been depreciated for the first year only.

Windows:
Depreciation Proposal
Object Transactions Analysis
Object Balances Analysis

Depreciation Proposal

Windows:
Depreciation Proposal

1. Open the Depreciation Proposal window.

2. Right-click and then click Create Depreciation Proposal.

3. Depreciate your seventh machine for the next year through period 12 (the last period in your fixed asset year).

4. Authorize and post the depreciation proposal.

5. Continue creating, authorizing, and posting proposals until the asset is fully depreciated for book purposes.

Queries

Windows:
Object Transactions Analysis
Object Balances Analysis

1. Open the Object Transactions Analysis window. You can view the depreciation transactions using this query..

2. Open the Overview – Object Balances Analysis window. You can view the query for the last period of each year in the proposal. You can view the accumulated depreciation for the current and prior years, and the net value of the object by period. The depreciation proposals (Years 1 through 6) should have the total accumulated depreciation shown in the table below.