Depreciation Profile
A depreciation profile is the rule an asset book depreciates by: the method, how often a depreciation line is made, and whether the periods follow the calendar year or the company's fiscal year. An asset book names one profile, and every asset acquired into that book takes its method and frequency from it.
What it is for
The profile answers three questions for every asset in a book: how is the charge worked out, how often is it charged, and when does a year start. It does not hold a life or a rate: the asset life in years and the reducing-balance percentage come from the Asset Group.
The rule people get wrong: only two methods are calculated. An acquisition into a book whose profile carries any other method is refused on Save.
Every field in plain words
| Field | What it means | What to put |
|---|---|---|
| Depreciation Profile | The code of the profile | A short code, for example SLM-M. Required, and must not already exist |
| Name | What the profile is | Straight line, monthly. Required |
| Depreciation Year | Where a depreciation year starts | Fiscal: the year of the book's calendar, from the fiscal calendar. Calendar: 1 January to 31 December |
| Depreciation Method | How the charge is worked out | Straight Line (SLM) or Reducing Balance (RBM). Nothing else is calculated |
| Depreciation Frequency | How often a depreciation line is made | Monthly, Quarterly, Half-Yearly or Yearly. A profile saved earlier with Fiscal Period is read as monthly |
| Depreciation Percentage | Shown only when the method is Reducing Balance | Nothing reads it. The reducing-balance rate an asset uses is the Depreciation Percentage on its Asset Group |
How to configure it
- Make one profile per combination the company uses. Most companies need one: straight line, monthly, fiscal year.
- If a second book is kept for tax with a different method, make a second profile for it, for example reducing balance, yearly.
- Pick Fiscal only when the general ledger has a fiscal calendar with its periods for every year you will depreciate in. A depreciation run refuses an asset when it cannot find the fiscal periods.
Scenarios
- A company depreciates its fleet monthly on a straight line. One profile: Straight Line, Monthly, Fiscal. Name it on the asset book.
- The tax rules want reducing balance on a yearly basis (written down value). A second profile: Reducing Balance, Yearly. Name it on a second asset book, and put the rate on each Asset Group.
- Depreciation is charged once a quarter. Frequency Quarterly. A quarter is charged only once the run's Till Date covers its last day.
What it is connected to
- Asset Book names the profile.
- Asset Acquisition copies the method and frequency from the book's profile when the asset is acquired.
- Asset Depreciation works the periods out from the method, the frequency and the Depreciation Year.
- Set up a new company - where this screen fits in the setup order.
If something looks wrong
- "Depreciation Method: ... is not calculated yet; use Straight Line (SLM) or Reducing Balance (RBM)" on an acquisition. The book's profile carries another method. Change the profile to SLM or RBM.
- "No Fiscal Period found in Calendar: ... for Asset: ..." on a depreciation run. The profile follows the fiscal year and the calendar has no periods for the dates being run. Add the fiscal year to the calendar, or set a calendar on the asset book.
- Reducing balance charges the wrong rate. The rate is the Depreciation Percentage on the Asset Group, not the one on this screen.