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Depreciation Calculation Question and Issue

  • 1.  Depreciation Calculation Question and Issue

    TOP CONTRIBUTOR
    Posted 27 days ago
    Install NAV 2018 Fixed Assets and have a real puzzler on my hands.

    Trying to install assets from old system which use Double Declining Balance with Half year convention.

    According to MS Depreciation Guide you can only use the half year convention with Declining Balance 1 ( Depreciation calculated annually and divide by 12 - generates even monthly depreciation) not Declining Balance 2 ( calculates declining balance every month).

    The formula for Declining Balance 1 is Depreciation Amount = (Declining-Bal. % x Number of Depreciation Days x Depr. Basis) / (100 x 360)

    To actually enter this you need to hand calculate a Declining Balance % and enter on the FA Card. ( some explain to me why I need to hand calculate a % when I own a $500,000 ERP system - LOL)

    The asset in question was acquired 09/01/2018 with a three year life and had a basis of $75889.32 with $ 4158.32 in depn for the month of 09/18 from legacy system.

    Based on the above formula October Depn should be

    (67% x 30 x 75,889.32) / (100 x 360)

    $152,537,533.20/36000 = $4,237.15 which compared to September is fine.

    The 67% is calculated as follows 1/years of service x 2 or 1/3*2.


    Yet when we run the calculate depreciation it returns $6324.11 for October

    This is stalling my effort as I cannot complete my year end without it.

    Going have It see if I can run debugger in the morning to try and and see what it's doing.

    Is my logic correct?

    Is the something wrong with the calculation in NAV?

    A sucessful answer is worthy of liquid refreshments at Summit!

    ------------------------------
    Michael Carr
    VP , Finance
    Philadelphia Scientific LLC
    Montgomeryville PA
    ------------------------------


  • 2.  RE: Depreciation Calculation Question and Issue

    SILVER CONTRIBUTOR
    Posted 27 days ago
    So do you have half year convention turned on?  You mention it at the beginning but I'm not sure I see in your formula.  That would create a higher depreciation for the period.  Just a guess....

    ------------------------------
    Patti Parrish
    Finance Project Manager
    EthosEnergy Power Plant Services
    Alpharetta, Ga
    ------------------------------



  • 3.  RE: Depreciation Calculation Question and Issue

    TOP CONTRIBUTOR
    Posted 27 days ago
    Patti,

    Thank you for your response.

    Yes the half year convention is turned on that asset.

    But you are .right the half year doesn't appear in my calculation.

     so if I revisit the calculation -

    $75889.32 (AQ Cost) *.67 (Depn %) = $50,845.84
    $50,845.84  (Full Year Depn) / 2 = $25,296.19 for Half Year
    $25,296.19 /4 ( remaining months in fiscal year)   = $6,324.05

    So your guess is the missing key and lead me to the realization that I probably am not accounting for the remaining 4 months in the fiscal year properly.

    Barring investigation---- the DB-1  depreciation assets it looks like it is correct.

    Thank you so much for pointing me in the right direction. My brain was fried and once more a NAVUG member comes to the rescue!

    ------------------------------
    Michael Carr
    VP , Finance
    Philadelphia Scientific LLC
    Montgomeryville PA
    ------------------------------



  • 4.  RE: Depreciation Calculation Question and Issue

    TOP CONTRIBUTOR
    Posted 22 days ago
    Still having issues with DDB depreciation with a half year convention

    Our old PC based system died and the last reports we have are from 09/30/2018.

    We loaded 09/30/2018 Aq Costs and 09/30/2018 Accum Dep'n Balances.

    Our fiscal year is a Calendar year.

    When we run depreciation 10/1/2018 the depreciation is up by $10,000 per month. almost all due to the DDBL assets.

    We created a new database and loaded the AQ Costs as of 09/30/2018, loaded no accum deprecation at all.

    Theory was that it wasing picking up correct balance at start  of fiscal year. That totally destroyed the DDBL

    Legacy deprecation appears correct against both manual and web based calculators.

    Current thought is to try loading Accum Depn as of 12/31/2017. I was expecting some change but the amount and error are somewhat more than minor.

    So the question is with Balances of 09/30/2018 how should we load the accumulated deprecation balances and run calculate depreciation  for Fiscal 2018?

    Any suggestions would be greatly appreciated. Note S/L and 2018 DDBL as DB-1 work alright just Pre2018 Legacy assets are off?


    ------------------------------
    Michael Carr
    VP , Finance
    Philadelphia Scientific LLC
    Montgomeryville PA
    ------------------------------



  • 5.  RE: Depreciation Calculation Question and Issue

    SILVER CONTRIBUTOR
    Posted 21 days ago
    And you've checked your starting and ending dates for depreciation?

    ------------------------------
    Patti Parrish
    Finance Project Manager
    EthosEnergy Power Plant Services
    Alpharetta, Ga
    ------------------------------



  • 6.  RE: Depreciation Calculation Question and Issue

    TOP CONTRIBUTOR
    Posted 21 days ago
    That what's confuses me ----- in the calculate depreciation function there are not from or to dates simply posting dates for FA journal and Posting date?

    SO I but in 10/31/2018 for the calculate October from the 09/30/2018 accumulated deprecation.
    and 09/30/2018 for the calculation from scratch with nor loading of prior accumulated deprecation.

    Note: both in different test data bases.

    ------------------------------
    Michael Carr
    VP , Finance
    Philadelphia Scientific LLC
    Montgomeryville PA
    ------------------------------



  • 7.  RE: Depreciation Calculation Question and Issue

    SILVER CONTRIBUTOR
    Posted 21 days ago
    Have you checked the depreciation period located on the fixed asset card?  Are those dates set properly?

    ------------------------------
    Patti Parrish
    Finance Project Manager
    EthosEnergy Power Plant Services
    Alpharetta, Ga
    ------------------------------



  • 8.  RE: Depreciation Calculation Question and Issue

    TOP CONTRIBUTOR
    Posted 21 days ago
    the only date on the FA Card is the deprecation Starting Date. which are correct. For declining balance 1 doesn't let you enter # of ears or ending date.

    The setup of the assets is quite awful.​

    ------------------------------
    Michael Carr
    VP , Finance
    Philadelphia Scientific LLC
    Montgomeryville PA
    ------------------------------



  • 9.  RE: Depreciation Calculation Question and Issue

    SILVER CONTRIBUTOR
    Posted 21 days ago
    I've never set up a DB-1 that already had values from another system.  I wonder if you start with the beginning date for depreciation and work through what Nav might be calculating as past depreciation value, if you will see how it's coming up with it's October calculation.  Lots of work though depending on how far back you go. I also wonder if you put depreciation in for each of the ending years instead of in one lump sum, if it could do a better job of calculating what's next.

    ------------------------------
    Patti Parrish
    Finance Project Manager
    EthosEnergy Power Plant Services
    Alpharetta, Ga
    ------------------------------



  • 10.  RE: Depreciation Calculation Question and Issue

    TOP CONTRIBUTOR
    Posted 20 days ago
    Patti,

    After thinking about and reviewing the results I can't see how that would help. Straight line is as simple as it gets and simple requires useful life and cost.

    One of the assets is straight line , uses half year convention , 5 year life

    My calculation is $1998.49 /5 = $399.70 full year / 2 for half year = $199.85 / 12 = $16.65  Since AQ data is 09/01/2018 and FY is calendar there are 4 months remaining the deprecation for each month remaining should be (199.85/4) $49.96. NAV calculates $27 which does Not match up to anything.
    I have one question  --- in the Imagine academy video it is implied that to depreciate for a full month you use the first day of the month as opposed to the last ( use 09/01/2018 for September 2018 as opposed to 09/30/2018)? I have been using 09/30/2018 which maybe an issue? I have only seen it in documentation there and nowhere else.

    My last effort will be to load the Accum Depn as of 12/31/2017 and recalculated from 01/01/2018..09/30/2018 and see if that makes any difference.

    After that I may have to find a third party FA program that I can use and just dump NAV fixed assets as a bad program.

    ------------------------------
    Michael Carr
    VP , Finance
    Philadelphia Scientific LLC
    Montgomeryville PA
    ------------------------------



  • 11.  RE: Depreciation Calculation Question and Issue

    SILVER CONTRIBUTOR
    Posted 20 days ago
    My experience is the system assumes 30 days in a period but technically it calculates from the last day you ran depreciation to the posting date on the calc depreciation function.  I'll use an example – if the last posting date of depreciation was 7/28, and the new posting date was 8/25- the system assumes 30 days in July so 2 days come from July and then another 25 for August, for a total of 27 days.

    The example you're giving now is straight line with half year, not DB-1.  I probably need a bit more info on this one to help with calculation.  The half year acceleration already occurred?  Or you are starting a new asset?



    ------------------------------
    Patti Parrish
    Finance Project Manager
    EthosEnergy Power Plant Services
    Alpharetta, Ga
    ------------------------------



  • 12.  RE: Depreciation Calculation Question and Issue

    GOLD CONTRIBUTOR
    Posted 21 days ago
    Good Morning,
    Did you try and run the calculated depreciation and change the forced number of days to the total amount of days.  I have mine set at 30 days, but if I needed to run that for a longer time period I change that number to that number of days taking into account months that have 28 days or 31 days. Our fiscal year end June 30th so if I need to run them from January 1 to June 30th I would set the days at 182 days.
    Try that in your test company and see how that works.

    ------------------------------
    Laurie Gooch
    Accounting Coordinator
    Creative Food Ingredients
    Perry NY
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  • 13.  RE: Depreciation Calculation Question and Issue

    TOP CONTRIBUTOR
    Posted 20 days ago
    Laurie,

    Have not tried that method. Can't say I would care to. I am completely uncertain of how to load these legacy assets in to get deprecation to behave in the proper manner.  That method and how to use is a mystery to me and apparently my $$$$ needs me to do manual calculation to do declining balance?  Why would I buy a software package that requires a manual calculation be made to depreciate fixed assets using a standard method. All it should require is # of years of life , Acquisition cost, use of mid year , quarter , midmonth, and the method itself.

    I am about to abandon the quest to use  NAV fixed assets as badly written , designed and documented. Look for a third party software.

    Thanks for your suggestion, but the logic behind that method is just too much of a mystery.







    ------------------------------
    Michael Carr
    VP , Finance
    Philadelphia Scientific LLC
    Montgomeryville PA
    ------------------------------