Depreciations

What is it and what is it for?

Every Fixed Asset loses value over time. Instead of calculating that loss by hand asset by asset, every month you run the Depreciations process by entering the cutoff date: AdmCloud automatically finds every asset flagged for depreciation that qualifies as of that date, calculates the amount that applies to each one based on its method (Straight Line or Declining Balance), and generates, for each asset, a debit to its depreciation expense account and a credit to its accumulated depreciation account.

The calculation accounts for what's already been depreciated, both what's recorded inside AdmCloud and what was depreciated before the system was implemented (calculated from the asset's Purchase Value and Initial Value), so assets aren't over-depreciated. If an asset only has a smaller remaining portion left to depreciate than its regular installment, AdmCloud adjusts the amount so the asset doesn't drop below its Final Value (salvage value).

Each run generates a single document with the depreciation of every asset included. That document can be processed in the background (through a work queue), so the accounting entry may take a few seconds or minutes to complete after saving, depending on how many assets are involved.

How to use it

1. Open the list and click Create. You need the "add" level of the Depreciation permission.
2. Set the Date as of which you want to calculate depreciation (usually the last day of the month) and the Subsidiary (if your plan uses it).
3. Optionally filter by Location or Department if you only want to depreciate the assets in that location/department (and their sublevels) in this run; leave them blank to include every eligible asset in the subsidiary.
4. Optionally set Division and Item Class on the header: these are used as a fallback cost center on the accounting lines of assets that don't have their own configured. They don't filter which assets are included.
5. Add a Reference and Notes if needed.
6. Save the document. AdmCloud finds every eligible asset based on the filters you set, calculates each one's depreciation amount, and automatically generates its accounting entry.
7. Review the result on the document's details: the Fixed Assets tab shows, for each asset included in the run, its code, name and calculated depreciation amount.

Key capabilities

• Calculates and records, in a single run, the depreciation of every eligible Fixed Asset as of a date, with no need to calculate or enter them one by one.
• Supports two depreciation methods configured on each Fixed Asset: Straight Line (a fixed monthly amount based on its depreciation period) and Declining Balance (an annual percentage applied to book value).
• Automatically accounts for what's already been depreciated (inside and before AdmCloud) so it never exceeds the asset's Final Value (salvage value).
• Automatically generates the balanced accounting entry (expense debit, accumulated depreciation credit) for every asset depreciated.
• Resolves the expense and accumulated depreciation accounts in a cascade: first the fixed asset's own accounts, then its fixed asset class, then the subsidiary, and finally the company.
• Lets you narrow a run by Location or Department, and use Division/Item Class as a cost-center fallback.
• Direct link to the generated accounting entry from the document's details.
• Attach supporting files to the document.
• Lets you duplicate an existing run.
• Printable report of depreciation runs, filterable by date range, asset, location and subsidiary.
• Customize the columns shown on the list screen and save your own configuration.

Key fields

Validations on save

• Open Fixed Assets accounting period for the document's date and subsidiary.
• At least one eligible asset must exist for the given date and filters; if none qualify (or none end up with a depreciation amount greater than zero), the run can't be saved.
• An asset using the Straight Line method must have a Depreciation Period greater than zero configured; otherwise the run fails for that asset.
• The calculated depreciation amount can't come out negative for any asset included.
• The fixed asset (or, failing that, its class, its subsidiary or the company) must have a valid depreciation expense account and a valid accumulated depreciation account configured; if they're not set up correctly, the run can't be saved.
• If the document sets a Location, it must belong to the document's own subsidiary.
• The Department, Item Class and Division selected can't be voided.
• There can't already be another Depreciations run with the same document number.
• The document number can't be changed when editing an already-saved run.
• You can't edit, delete or void a run that's already voided.

Which assets a run includes

A Fixed Asset is included in a Depreciations run's calculation only if it meets every one of these conditions:

• It's flagged as "Depreciable" and its type is Fixed Asset (not an external equipment record).
• Its Initial Value and Purchase Value are both greater than zero.
• If its method is Straight Line, it has a Depreciation Period greater than zero (the Declining Balance method doesn't need this).
• Its Purchase Date is on or before the run's date (or it has no purchase date recorded).
• It belongs to the subsidiary, location and/or department set as a filter (when one is set).
• It still has a remaining balance to depreciate above its Final Value (salvage value); if it's already fully depreciated, it's skipped.

Managing the document

From an already-saved run's details, depending on your permissions, you can:

• Duplicate it to create a new run from its data (for example, for the following month).
• Void it (requires the "void" permission level); a voided run keeps its history but stops affecting the books.
• Delete it (requires the "full" permission level), as long as it isn't linked to another dependent record.
• View the accounting entry generated by the run.
• View the list of depreciated assets in that run, with the amount calculated for each one.
• Attach or review supporting files.

Availability and permissions

• The Fixed Assets module is an add-on module of the Enterprise edition that your company activates separately; without it, this screen isn't available.
• Access is controlled by the "Depreciation" permission, with separate levels for browse, add, edit, delete and void.
• With Subsidiaries enabled, the Subsidiary is required on every run and you can filter the list by it.
• The Void column on the list is hidden by default, but you can show it from the column selector.
• Custom Fields you mark as visible on Depreciations also show up on the form, if your plan includes this feature.

Tips and common mistakes