Fixed Assets - Depreciation Methods

Desi

I am setting up Fixed Assets for my customer. However, there are only the following depreciation methods available:SL, DB1, DB2, DB1/SL, DB2/SL. In addition I would need for tax purposes methods that use half-year and midquarter conventions e.g. MACRS. I know that you can customize your own depreciation methods but I can't see how I will be able to set up a depreciation method that uses for example the half-year averaging convention. Also, how can you set up the 168 (k) % calculation in Navision? Please don't tell me that I have to tell my customer that they have to post those special depreciations manually :roll: ...

philippegirod

You should have 2 depreciation method more.. What is your version ?
The list of dep. method is :
Straight-Line,Declining-Balance 1,Declining-Balance 2,DB1/SL,DB2/SL,User-Defined,Manual

Desi

The version is 3.7A. In the US you can use special depreciation methods for tax reasons. These depreciation methods must be able to handle half-year convention and midquarter convention. Also there is the 168(k)% that needs to be calculated before starting the calculation for the depreciation.
168(k)%:
"The Job Creation and Worker Assistance Act of 2002 allows you to take an additional 30% depreciation allowance in the year you place an asset in service. In 2003, the allowance was increased to 50% for assets placed in service after May 5, 2003."
Therefore:
1. Navision should first calculate the 168(k) Allowance by multiplying the asset's depreciable basis by either .30 or .50 and then reducing the depreciable basis by that amount.
2. Then it should calculate the remaining depreciation for the asset’s life, using the new depreciable basis.
Example:
Office equipment for $10,000 on October 1, 2001 and places it in service on that date. The equipment has a recovery period of 7 years.
1. $10,000 x 30% = $3,000
$10,000 - $3,000 = $7,000 (new depreciable basis)
2. Depreciation 2001 using Half-year averaging convention and declining balance (DB1/SL in Navision)
7000

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x 2 x 0.5 = 1,000
7
Navision should treat the additional allowance ($3,000) as a reduction in the asset’s depreciable basis, not as an increase in the accumulated depreciation.
I just don't know how to handle these 168(k) percentages... ](*,)