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In this articleRevaluation of fixed assets can consist of appreciations, write-downs, or general value adjustments. When the value of a fixed asset has increased, you post a journal line with a higher amount, an appreciation, to the depreciation book. The new amount is recorded as an appreciation according to the fixed asset posting setup. When the value of a fixed asset has decreased, you post a journal line with a lower amount, a write-down, to the depreciation book. The new amount is recorded as a write-down according to the fixed asset posting setup. Indexation is used to adjust multiple fixed asset values, for example per general price changes. The Index Fixed Assets batch job can be used to change various amounts, such as write-down and appreciation amounts. To post an appreciation from the fixed asset G/L journal
To post a write-down from the fixed asset G/L journal
To perform general revaluation of fixed assetsIndexation is used to adjust multiple fixed asset values, for example per general price changes. The Index Fixed Assets batch job can be used to change various amounts, such as write-down and appreciation amounts. The Allow Indexation check box on the Depreciation Book page must be selected.
To post additional acquisition costsYou post additional acquisition cost for a fixed asset in the same way as you post the original acquisition cost: from a purchase invoice or from a fixed asset journal. For more information, see Acquire Fixed Assets. If depreciation has already been calculated for the fixed asset, select the Depr. Acquisition Cost check box to have the additional acquisition cost less the salvage value depreciated in proportion to the amount by which the previously acquired fixed asset has already been depreciated. This ensures that the depreciation period is not changed. The depreciation percentage is calculated as: P = (total depreciation x 100) / depreciable basis Depreciation amount = (P/100) x (extra acquisition cost - salvage value) Remember to select the Depr. until FA Posting Date check box on the invoice, the fixed asset G/L journal, or the fixed asset journal lines to ensure that depreciation is calculated from the last fixed asset posting date to the posting date of the additional acquisition cost. Example - Posting Additional Acquisition CostsA machine is purchased on August 1, 2000. The acquisition cost is 4,800. The depreciation method is straight-line over four years. On August 31, 2000, the Calculate Depreciation batch job is run. Depreciation is calculated as: book value x number of depreciation days / total number of depreciation days = 4800 x 30 / 1440 = 100 On September 15, 2000, an invoice is posted for painting the machine. The invoice amount is 480. If you selected the Depr. until FA Posting Date check box on the invoice before posting, the following calculation is made: 15 days of depreciation (from 09/01/00 to 09/15/00) is calculated as: book value x number of depreciation days / remaining number of depreciation days = (4800 - 100) x 15 / 1410 = 50 If you selected the Depr. Acquisition Cost check box on the invoice before posting, the following calculation is made: The additional acquisition cost is depreciated by ((150 x 100) / 4800) / 100 x 480 = 15 The depreciable basis is now 5280 = (4800 + 480), and the accumulated depreciation is 165 = (100 + 50 + 15), corresponding to 45 days of depreciation of the total acquisition cost. This means that the asset will be totally depreciated within the estimated lifetime of four years. When the Calculate Depreciation batch job is run on 09/30/00, the following calculation is made: Remaining depreciable life is 3 years, 10 months and 15 days = 1395 days Book value is (5280 - 165) = 5115 Depreciation amount for September 2000: 5115 x 15 / 1395 = 55.00 Total of depreciation = 165 + 55 = 220 If you did not select the Depr. until FA Posting Date check box, the asset would lose 15 days of depreciation because the Calculate Depreciation batch job run on 09/30/00 would calculate depreciation from 09/15/00 to 09/30/00. This means that when the Calculate Depreciation batch job is run on 09/30/00, the calculation is as follows: Remaining life time is 3 years, 10 months and 15 days = 1395 days Book value is (4800 + 480 - 100 - 15) = 5165 Depreciation amount for September 2000: 5165 x 15 / 1395 = 55.54 Total of depreciation = 100 + 15 + 55.54 = 170.54 See alsoFixed Assets FeedbackSubmit and view feedback for Additional resourcesWhen an asset has a significant decline in value and is written down this is called ___?Depreciation is thus the decrease in the value of assets and the method used to reallocate, or "write down" the cost of a tangible asset (such as equipment) over its useful life span. Businesses depreciate long-term assets for both accounting and tax purposes.
What is written down value of an asset?What Is Written-Down Value? Written-down value is the value of an asset after accounting for depreciation or amortization. In short, it reflects the present worth of a resource owned by a company from an accounting perspective. This value is included on the company's balance sheet in its financial statements.
What does it mean to writeA write-down is an accounting term for the reduction in the book value of an asset when its fair market value (FMV) has fallen below the carrying book value, and thus becomes an impaired asset.
What is a decline in the value of an asset called quizlet?Referred to as capital expenditures. Impairments. A permanent decline in the market value of an asset. So as not to overstate the asset on the books, the company writes the asset down to its new market value during the year in which the decline in value occurs. Plant Asset Disposals.
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