Reasons behind Remaining NBV

Question

Hello all! 
 
 I wanted to see if there is a reason or setup that causes assets to have a remaining NBV. One of the things I thought about was that some of the assets were in another software system and then setup in Sage. 
 I attempted to search for a thread that posed this question already but did not find one. If there is already a thread, can you share the link? 
 Thank you and happy new year!

Delray · Accepted Answer

Hello Connie, 
 That really goes back to the Adjustment question you asked which, I just realized, I talked about under-depreciated assets but never explained what those really are. 
 The calculation of all Straight Line methods (SL, SH, SF, AD, MF100 etc.) in the program is: Value/Life 
 What happens when importing data from another system is that the numbers from that old system is Imported in to SFA as the Beginning information. Beginning Information is a Manual Override of the depreciation calculated by the SFA. In other words, A Beginning Date in an asset is telling the program that from the Placed in Service date to the Beginning date - do not calculate depreciation but this is the amount of depreciation as of that date. 
 An Assets is under-depreciated when the Beginning Accum amount is less than what the program would have calculated from the Placed in Service date to the Beginning date. 
 With the Straight Line calculation being Value/Life, the program never looks at the Beginning Accum as a part of the calculation which is why we usually recommend the RV Method, since that calculation is the NBV as of the Beginning Date over the Remaining life as of the Beginning Date. Too Confusing? 
 ~Delray

Delray · Answer

To me, everything is conditional in the program. You give me one circumstance, I will give an answer, change just one element of that circumstance, you could get a completely different sounding answer. RV is only really needed if the asset is under-depreciated. Over-depreciated asset will fully depreciate, just a little before the normal EOL. 
 If you are looking for a general statement, the closest thing I can give would be: In the Internal book, use RV in any Straight Line asset which has Beginning information in it. Even that would be subject to the conditions in the asset. 
 ~Delray

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Reasons behind Remaining NBV

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