Fixed Asset Depreciation-related with Appreciation

dede_aja_tuh

Dear All,

I got question about Fixed Assets Depreciaton :

1. I create Fixed Assets with this Setting :
- Depreciation Method : Straight Line
- Depreciation Starting Date : 03/01/2011 (3 March 2011)
- Straight % = 25%

2. I create FA G/L Journal with Acquisition Cost = 120.000.000 IDR

3. I do Calculate Depreciation with this setting :
- FA Posting Date : 03/31/2011
- Use Force of Days : YES (Checklist)
- Force No of Days : 30
- Posting Date : 03/31/2011
- Insert Bal. Account : YES (Checklist)

then click OK button, then i go to FA G/L Journals, and i post the depreciation transaction with this amount : 2.500.000 IDR. then i go to FA menu, i see that Book Value for this FA already reduced 2.500.000 became 117.500.000 IDR (from 120.000.000 - 2.500.000)

Until this step, i have the same amount depreciation with NAV : 2.500.000, this is my calculation :

Book Value / Month = 120.000.000 / 48 Month (4 years) = 2.500.000

4. Next, i do APPRECIATION to mark up the book value for this FA. I go to menu FA G/L Journals, in field FA Posting Type : Appreciation, and i fill field amount : 10.000.000 IDR, then i post that transaction.

5. Next, i go back to FA menu, and i see book value already increase became : 127.500.000 IDR (from 117.500.000 + 10.000.000).

6. Next i do Calculate Depreciation again. Same with number 3 setting, but i just change at FA Posting Date and Posting Date became : 04/30/2011 (30 April 2011).

7. I go to FA G/L Journals menu and i see amount : 2,708,333.

My question is : Depend on my calculation, i got this amount for last calculation : 2,712,765. It is different from NAV.

For your info, my calculation to get that nominal is : 127.500.000 / 47 = 2,712,765.

Anyone, please let me know, how NAV calculation, so NAV get that number actually (2,708,333)?

Thanks.

mgmutha

Hi Dede,

As you are using Straight Line Method, system will Calculate 25 % Dep. on 130000000.00 (120000000.00 +10000000.00)= 32500000/12 = 2708333

In Straight Line Method, Dep. will always calculate on Acquisition Cost + Appreciation Cost.

If you are thinking to calculate dep. as per your requirement i.e. 127.500.000 / 47 = 2,712,765, then you have to use Decline Balance Method.