How to change the estimated life for the fixed asset?

SOLVED

Dear Sir / Madam,

I would like to seek your advice as follow:

We have an fixed asset which is bought in 2014 with estimated life 60 months. However, the fixed asset will be scrapped in Mar 2017. So that we will change the estimated / useful life from 60 months to remaining 7 months (from Sep 16 – Mar 17).

Are there any solution / method for this issue?

Please advise.

Thanks.
Ruby

  • 0
    verified answer

    Hello Ruby,

    You are looking to use the Calculated Method of Fully depreciating an asset, so first, after ensuring the depreciation is currently calculated through September 2016, you would change the depreciation method to RV, answering Yes-Current Thru Date to the questions, but to determine the Estimated life needed to hit your target date, I would need to know the Month the asset was Placed in Service.

    For example, if the asset was Placed in Service in March of 2014, then your Estimated life would need to be 3 years 1 month, again answering Yes-Current Thru Date to the questions, and then the last month that asset will take depreciation with a NBV of Zero will be March of 2017.

    Since the RV method has a full month disposal convention, if you are looking to Dispose that asset in March 2017 and have a NBV of Zero, you will need to make the life 3 years, because the full month convention does not take depreciation in the month of disposal. 

    See How to fully depreciate an under depreciated asset? for further details

  • 0
    Dear Delray,

    Thank you very much. We have solved the problem after changing RV method of this asset.

    Regards,
    Ruby