[EM] Depreciation Processing

Created by Crystal Ann Harvey, Modified on Tue, 14 Oct at 12:03 PM by Crystal Ann Harvey

Use this form to post depreciation monthly, quarterly, yearly, or on whatever cycle you choose for a single asset or all assets.

You can post depreciation only for assets that have been set up and have calculated schedules in the EM Asset Setup form.

Note: If you calculate depreciation using a third-party depreciation package, do not use the EM Depreciation Posting program. Instead, import your depreciation data using the Imports (IM) module. The Imports module provides a series of programs that allow you to set up import templates and cross-references, import your depreciation data, edit or delete the imported data as necessary, then update the data to EM and GL.

The depreciation process uses the asset's Amount to Take and Amount Taken values (in EM Asset Setup > Schedule tab) to determine the depreciation amount for that asset and updates the amount as the "amount taken" for the current month. Depreciation transactions are stored in the EM Cost Detail table (EMCD). Until you post the depreciation batch, you can access and edit the transactions in EM Cost Adjustments; however, there is usually no reason to do.

Before You Begin

Prior to posting depreciation for the first time, assign a Depreciation Cost Code and Depreciation Cost Type (in EM Company Parameters) to each depreciation cost entry.

Additionally, you must set the Last Month Calculated field (in EM Company Parameters) before you can begin posting depreciation. The system uses this month to calculate the correct depreciation amount to post. After the initial setup, the system will update this field automatically each time you run the depreciation process.

Note: Automatic update to the Last Month Calculated field will occur only if you post depreciation for all assets; that is, you leave the 'Post Depreciation for Select Assets' option unchecked when running this program.

When to Run Depreciation

It is not necessary to run depreciation calculations every month. At a minimum, you must calculate through the 12th period of your year before you can close that period and before you can post any depreciation to the next year. Whenever you run this program, the process will calculate enough depreciation to bring the asset current and post the amount to the current month.

For example, if you last ran the depreciation process through period 03/23 and you now run for period 06/23, the system will calculate three months of depreciation and post it to period 06/23.

Note: You can set the Calculations Required option in EM Company Parameters to Monthly if you want the system to restrict you from closing a period until you have run EM Depreciation Processing.

Inactive Equipment

If you are running depreciation for a specific piece of equipment, and that piece of equipment is flagged as 'Inactive' (in EM Equipment), you will receive a message informing you that the equipment is inactive, but you will be allowed to proceed with the depreciation process. If you are running depreciation for all equipment, the system will not display the warning message for inactive equipment; it will just proceed with the depreciation process.

GL Account Posting

Posting depreciation has the following General Ledger effect:

Debits the GL account assigned (in EM Departments) to the Depreciation Cost Type designated in EM Company Parameters
Credits the Accumulated Depreciation GL Account defined in EM Departments.

You can override these accounts in the EM Asset Setup if necessary.

Once you have defined an asset's depreciation parameters and calculated a schedule (in EM Asset Setup), you can then use the EM Depreciation Processing form to calculate the actual depreciation amounts.

The system uses depreciation scheduling information set up in EM Asset Setup to determine how much depreciation to post. Calculations are based on the scheduled Amount to Take for that year through the current month and the Amount Taken to-date for that year through the current month.

The amount taken-to-date is subtracted from the scheduled Amount to Take, and the result is entered in the Amount Taken for the current month.

For example, assume you are posting depreciation on a monthly basis:

EM Asset Setup: Total Amt to Depreciate: $1200.00

EM Depreciation Processing: Posting Date: 03/23

Month	Amount to Take	Amount Taken	Balance
01/23	100.00	100.00	0.00
02/23	100.00	100.00	0.00
03/23	100.00	0.00	100.00

The total Amount to Take through the current month (03/23) is $300.00. The total Amount Taken for the year through 03/23 is $200.00. The remaining balance of $100.00 is posted to 03/23 in the Amount Taken column.

The system stores depreciation entries created in EM Depreciation Processing in the Cost Detail file (EMCD). Until you post the batch in EM Batch Process, you can edit or delete the entries in EM Cost Adjustments. However, nothing you do in EM Cost Adjustments affects the asset's Amount Taken value.

If you elected to update GL when posting depreciation (the Summary or Detail option selected on the Adjustments tab in EM Company Parameters), calculated depreciation updates an accumulated depreciation account and a depreciation expense account. Normally, both of these accounts come from the EM Department file. In the case of expense, it uses the account assigned to the cost code/cost type for depreciation specified in EM Company Parameters. However, you may override these accounts for each asset in EM Asset Setup.

Recalculating a Month

Rerunning the depreciation process for the same month does not double up depreciation, but it will correct for any schedule changes made since the first run.

For example, say that after posting depreciation for month 06/23, you find you must change the asset's life (# of month's to depreciate). This causes the asset's Amount to Take value to change when you recalculate its schedule.

In EM Asset Setup:

	Before	After Recalc
To Take	$1,200.00	$2,000.00
Taken To Date	600.00	600.00

Example:

If month 06/23 = 6/12 (six twelfths) of year, the system calculates what 6/12 of the annual total 'to take' amount (2,000) should be, which in this case, is $1000. It then looks at how much of that has already been taken to-date ($600) and creates another entry to post the difference ($400) to bring the Amount Taken to-date to $1000.

As you can see from the above example, if you rerun a month in EM Depreciation Processing and the asset's scheduled amount has increased, then EM Depreciation Processing will post the amount needed to catch up. If instead, the asset's scheduled amount has decreased, it will post a negative amount to catch up. If the asset's scheduled amount has not changed, then rerunning EM Depreciation Processing for the same month will result in no additional depreciation posting.