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Edwin Holden

Changing the Estimated Life of a Fixed Asset

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Hello,

I am wanting to change the useful life of some assets from 40 to 35 years.

Would it be as simple as changing the years to 35 and accepting the popup screen and running depreciation for that asset to get it current or what would those steps look like?

Thanks!

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    SUGGESTED

    Hello Edwin,

    It could be that simple, but it is the side effects, depending on the depreciation method, which could complicate things.

    To get a 40-year life, that would usually mean this is a Property Type R, AD asset. Making this change and answering Yes then selecting Current Thru Date (default) to the questions this asset will be under-depreciated so that the under depreciated amount will stay on the asset after the end-of-life.

    To avoid that, we usually recommend also changing the Depreciation Method to RM (Mid-month) or RH (Half-year) as appropriate since the Placed-in Service can affect the convention used on this type of asset.

    If these are current year asset, then answering Yes and selecting Placed-in Service date to the questions and re-running depreciation is the recommended process.

    ~Delray

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  • 0
    SUGGESTED

    Hello Edwin,

    It could be that simple, but it is the side effects, depending on the depreciation method, which could complicate things.

    To get a 40-year life, that would usually mean this is a Property Type R, AD asset. Making this change and answering Yes then selecting Current Thru Date (default) to the questions this asset will be under-depreciated so that the under depreciated amount will stay on the asset after the end-of-life.

    To avoid that, we usually recommend also changing the Depreciation Method to RM (Mid-month) or RH (Half-year) as appropriate since the Placed-in Service can affect the convention used on this type of asset.

    If these are current year asset, then answering Yes and selecting Placed-in Service date to the questions and re-running depreciation is the recommended process.

    ~Delray

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