Depreciation—Extended Exercises

IMPORTANT
It is extremely important that you set up and work within your own company to maintain your data integrity. If you work within any other company, your exercises will not function as intended and the data of other students might be affected. Predictable exercise results require that your data is isolated in your own company.

Basic Data Setup

Purpose: The purpose of this exercise is to show you how to use an internal ledger to post depreciation transactions. Fixed-asset transactions can affect only the fixed-asset sub-ledger, the general ledger, one or more internal ledgers, or a combination of these. These exercises will cover the posting of transactions to the internal ledger. If you have already completed the Accounting Rules and Fixed Assets setup, you can skip over these exercises and continue with the lesson.

General Setup

Purpose: The purpose of these exercises is to set up basic data in IFS/Accounting Rules and IFS/Fixed Assets to be able to start working with the other exercises. Continue with the other exercises if you have set up the basic data previously.

Preparations in IFS/Accounting Rules

Preparations in IFS/Fixed Assets

Internal Ledger Setup

Purpose: The purpose of this exercise is to define an internal ledger that can be used in IFS/Fixed Assets.

Windows:
Define Internal Ledgers

  1. Open the Define Internal Ledgers window.

  2. Create a new record, and enter a ledger ID and description (the remaining columns are not required for this exercise).

  3. Save your changes.

Windows:
Users per Internal Ledgers

  1. Open and populate the Users Per Internal Ledger window.

  2. Connect your user to your internal ledger.

  3. Save your changes.

Windows:
Internal Code Parts

  1. Open the Internal Code Parts window.

  2. Right-click and then click Change Ledger.

  3. Choose your ledger from the list and populate.

  4. Select the Used in IL check box for each of the code parts that will be used in the internal ledger.

  5. Set Code Part Function to FA accounting for the relevant code part.

  6. Save your changes.

Windows:
Account

  1. Open the Account window.

  2. Create several accumulated depreciation and depreciation expense accounts for use only in the internal ledger.

  3. Save

Windows:
Internal Posting Methods

  1. Open the Internal Posting Methods window.
  2. Right-click and then click Change Ledger.
  3. Choose your ledger from the list.
  4. Specify the accounts that will be used in the internal ledger. Use the accounts created for the internal ledger.

Accounting Rules Setup for Calculatory Depreciation

Windows:
New Voucher Type Assistant

Create a new voucher type for the internal ledger that will be used with fixed assets. This will be used for calculatory or income tax depreciation that will be updated only in the internal ledger (not the general ledger). Enter the type and description of the voucher, and then complete the following fields listed in the table below.
  1. Enter a new voucher type for internal ledger. (I.e. AIL)
  2. Selection: Internal ledger (Calculatory depreciation is to be updated to Internal ledger only)
  3. Find the Ledger ID.
  4. Uncheck the box Balance (the accounting transactions for Calculatory depreciation are not to be in balance, only cost transactions are to be created.
  5. Connect the voucher type AIL to function group A, use the list button.
  6. Check the box Default Setting For Voucher No Series and User Group
 Ledger Ledger ID Balance Next Button Function Group Default Settings for Voucher No Series and User Groups
Internal Ledger Choose your internal ledger Uncheck the box Click the button A (Enter into the table) Check the box

  1. Presss Finish.

Note: If the voucher type A has been used other transactions in Fixed Assets Accounting the user has to create a new voucher type for vouchers to be updated to General Ledger only.

Fixed Assets Setup for Calculatory Depreciation

Windows:
Fixed Assets Books

  1. Open the Fixed Assets Books window.
  2. Specify a book for calculatory depreciation, i.e. Calc. This will vary depending on the requirements for the country in which you are working.
  3. Create a new record, and enter the book and description. This book is to create accounting.
  4. Complete the other fields as shown in the table below.
Create Accounting  

Allow Change in Acquisition Value

  

Voucher Type

Check the box Check the box Choose your internal ledger fixed asset voucher type from the list of values (F8)
  1. Save your changes.

Windows:
Depreciation Method

  1. Open the Depreciation Method window.

  2. Create an internal ledger depreciation method. Specify an ID and description for the depreciation method before entering the information shown in the table below.

Method Type Base Value Type Starting Principle Change Base Value Depreciation Rate Type Factor Method Length Allow Depreciations Below Depreciable Basis
Straight Line Replacement Beginning of Period Accounting Year Fixed Factor 10% Use Specified Length, of 10 years Unchecked

  1. Save your changes.

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

Posting Control

Purpose: A combination control type must be defined before you can post depreciation to the general ledger using one depreciation method and to the internal ledger using a different one. This typically occurs when a company needs to track depreciation for internal purposes in the general ledger and for income tax or calculatory purposes in an internal ledger.

Windows:
Combination Control Types

  1. Open the Combination Control Types window, and create a new record.
  2. From the List of Values, select Posting Type FAP5 .
  3. Enter an ID and description for the new combination control type.
  4. Control Type 1 will be sorted by object group.
  5. Control Type 2 will be sorted by book.
  6. Save your changes.
  7. Repeat steps 1–6 for FAP6.

Windows:
Posting Control

  1. Open the Posting Control window, and query for FAP5 and FAP6.
  2. Delete the FAP5 line for the Account code part.
  3. Enter a new line for Posting Type FAP5.
  4. From the List Of Values, select the Account code part.
  5. From the List Of Values, select the combination control type created above.
  6. Save your changes.
  7. Highlight the line and right-click, and then click Details.
  8. Enter detail lines for the each object group combined with the general ledger book. From the List Of Values, select Object Group, Book, and Code Part values.
  9. Enter detail lines for each object group combined with the internal ledger book. From the List Of Values, select Object Group, Book, and Code Part values that are appropriate for the internal-ledger postings (use the accounts that were created for the internal ledger).
  10. Save your changes..
  11. Repeat steps 2–10 for FAP6.

Note: Combination control types are required when an object group uses two different books. Both books are to create accounting, but to different accounts and different ledgers depending on which object group and book are selected. If the same account number is used for both ledgers and books, a combination control type is not needed. The posting control uses the same account, but the voucher is transferred to different ledgers depending on which voucher type is used.

 

Windows:
Object

    12.   Open the Object window.

    13.   Query for your machine objects.

    14.   Click the Books tab.

    15.   Attach your new book and depreciation method to each object

    16.   Save your changes.

Main Exercises

Calculatory Depreciation

Purpose: The purpose of this exercise is to show you how to create, authorize, and post depreciation to an internal ledger. The internal ledger might be used for calculatory depreciation to track manufacturing expenses, or for income tax purposes. Depreciation can be charged for one or more object groups at a time.

In the depreciation setup, you should have created an internal ledger to be used for internal-ledger depreciation and created a combination control type for both general-ledger and internal-ledger depreciation. You will enter a new object with a user-defined base value, index number, and all other required information. You will also create depreciation proposals for the object, authorize and post the proposals, and then check the transactions in query windows.

Windows:
Object
Voucher Entry
Calculation Index
Depreciation Proposal
Object Balances Analysis
Vouchers Analysis
Vouchers Analysis

Define Object

Windows:
Object

  1. Open the Object window, and create a new machine.
  2. Click the User-Defined Base Values tab, and create a line using replacement value.
  3. From the List of Values, select an index ID.
  4. Save your changes.
  5. Change the object status to Investment.

Note: If there is no index ID, go to the Calculation Index folder and enter the index number (see the Preparations in IFS/Fixed Assets exercise). Make sure that all dates are appropriate.

 

Windows:
Voucher Entry

  1. Open Voucher Entry .

  2. Create a manual voucher, and enter an acquisition value of 100,000 for your new machine.

  3. Post the voucher to the general ledger.

Windows:
Object

  1. Return to the Object window.
  2. Query for your new machine, and change the status to Active.
  3. Click the Books tab and populate.
  4. Make sure that two books are attached to your machine: one for general-ledger depreciation, and one for internal-ledger depreciation. The general ledger book should have the method SL BP and an estimated life of 10 years, 0 months. The internal ledger book should have the depreciation method that you created above.
  5. Delete all other books that are attached to your machine.

Windows:
Calculation Index

  1. Open the Calculation Index window.
  2. Find the index ID connected to the object as you did in step 3 above.
  3. Select the line, right-click, and then click Recalculate Base Value to recalculate the object.
  4. Click OK.

Create Depreciation Proposal

Windows:
Depreciation Proposal

  1. Open the Depreciation Proposal window.
  2. Right-click in the upper part of the window, and then click Create Depreciation Proposal.
  3. Create a depreciation proposal for your new machine.
  4. Select the general ledger book. Create, authorize, and post the proposal for the first financial year.
  5. Select the internal ledger book. Create, authorize, and post the proposal for several periods. Make sure that the interval covers the point at which the base value is recalculated.

Queries

Windows:
Object Balances Analysis
Vouchers Analysis
Vouchers Analysis

  1. Open the Object Balances Analysis window, and view the object balance for each book.

  2. Query for different periods to see how net value and accumulated depreciation change over time.

  3. Voucher Analysis window. You can use this query to view the voucher for the general-ledger depreciation transaction in the general ledger hold table.

  4. Voucher Analysis window. You can use this query to view the voucher for the internal ledger depreciation transaction in the internal ledger hold table.

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