Hello BW78,

In order to answer any calculation question, I need to know everything about that asset, the complete Main tab of the Asset Detail view and, sometimes to get the complete answer, the entire company setup, fiscal year end, short years, etc.

~Delray

Delray,

I took your suggestion and contacted via phone.  I had a test DB set up, tested the RV method, and thought all was fine.  Now, the issue is FAS is not depreciating the assets equally each month, and it makes no sense at all, since it seemed to work just fine in the test company.

I have restored a company from a backup, so that I have a fresh slate, and the incorrect results were reproduced.

Here is all of the critical information you will need.

Business start date: 7/11/2005

Book Defaults: FYE is March; emulate=no; default=SL; Enable Begin=Yes

Two short years: 2005 was a five-month and 2007 was a three-month

Book Overrides: Half-Year/None/No

Accounting Cycle: Monthly

AcqDate: 7/11/2005

AcqMeth: Purchase

Ptype: Z

PISDate: 7/11/2005

AcqVal: 1,650,000.00

DepnMeth (until last year of life): SL

DepnMeth (Current): RV

EstLife (until last year of life):10yrs00mos

Estlife (current): 09yrs11mos

BusUse: 100%

§179: None

§168: None

Salvage: None

ITC: None

BegDate: 3/31/15

BegYTD:165,000.00

BegAccum: 1,599,435.48

CurrThrough: 3/31/15

§168Allow$: 0

CurrYTD: 165,000.00

CurrAccum: 1,599,435.48

NBV: 50,564.52

PerClose: 3/31/15

PerCloseYTD: 165,000.00

PerCloseAccum: 1,599,435.48

The initial issue, as state in my previous post, was that the assets were not depreciating fully.  Now, the assets depreciate fully, and depending on what I use for EstLife (10yrs or 9yrs11mos) I can have the assets depreciate fully in Q1 of our fiscal, or overlap into Q2.  Either way, we were forced to make an adjustment to our GL figures, so I suggested we take it all in Q1 to make it nice and clean.  I expected FAS to depreciate based on months, and since there are three months left of life, I expected the months to depreciate the same amount each month.  This is not taking place, and I need more help.

What do I need to provide to solve this issue.

thank you,

Ben

Hello Ben,

I am not sure exactly what your question is then, since the asset will fully depreciate in June which is still Q1.

If you are asking, why June? That is because the Business Start Date is not on the first of the month which has the effect of forcing a Deemed PIS date on the asset of 08/01/2005 from which the Estimated Life is calculating.  

If you are looking to get the asset to fully depreciation in May, then Business Start Date will need to change to 07/01/2005. With the Business Start Date set to the first of the month and the short years re-entered, the calculation would become ($50,564.48/2) instead of the allocated calculation you are seeing now.

~Delray

Hello Ben,

I am still working on the exact numbers, since my hand calculation appears a bit off from the program. I thought the calculation was:

((50564.48/12 weeks of the remaining life)*4) + ((50564.48/12 weeks of the remaining life)*5) + the remaining value left on the asset, but I cannot seem to match the program’s calculation exactly.

Note: The Business start date not being the first of the month is consider and invalid date, and my recommendation would be to fix that. This is precisely that type of calculation issues caused by an invalid Business start date.

~Delray

The question was, "Why are the months depreciating differently?"

In the last year of service, this year, we wanted to take three months worth of depreciation, ending in June.  I understand the aspects of depreciation essentially starting in August.

The problem is that the months are not reporting the same amount of depreciation.  Since there is ~$51k left, I would expect to see $17k per month.  In this particular case, April was 16,854.84, May was 22,473.12, and June was 11,236.56.  This does not make sense to me.  If there was an allocation by days in the month, I would expect May and June to be the same.

Thank you for your help,

Ben

Hello Ben,

Since I am not an accountant, I don’t have a full explanation on that, but it goes sometime like this: The shortest period the program can calculate is 28 days. When the Business start date is not the first of the month and since a Monthly cycle cannot calculate a period from 7/11 to 7/31, the Fixed Asset is being forced to pick an Alternate Accounting Period (AAP).

The AAP comes in several flavors but based of the calculation appearing in the program, it seems to have picked up a 4-5-4 cycle. The basics of a straight line calculate in an AAP is:

((Acquisition Value\Estimated life)\52 week in the year)*the number of weeks in the period

The number of weeks in the period being the 4 and 5. So in this case, the actual monthly cycle is not being used because of the Business start date is not the first of the month.

Did that make any sense?

~Delray

Hello Delray,

Thanks again for your time!  Two more questions regarding your last post: would changing the business start date affect other assets, and why "*4" and "*5"?  What is that allocation based off of?

Ben

Delray,

That makes sense, except why wouldn't the program just default to that date "behind the scenes?"  It seems like it does for the initial depreciation anyway, why not the business start date?

So, what happens at this point if I change the business start date to 8/1/2005?

Thanks,

Ben

Hello Ben,

The Business start date is a critical value of depreciation. If you could change it to 8/1/2005, any asset Placed in Service prior to that date would not calculate depreciation.

Fortunately, the program will not allow that change. It would give an Invalid date message and not accept the change. If you are going to change the Business Start Date, you can only change it to an earlier date which would mean 7/1/2005.

Note: You will need to re-enter your short years after making that change.

As for the why, there are several factors: the Invalid Business Start Date, the Short Years and the Beginning information all combining to cause the odd allocation of that Remaining value. And yes, it is true the calculations appear fine early on, but that is exactly the problem with using a Business Start Date which is not the first of the month, the calculation issues do not appear until later in the asset’s life.

~Delray