Reg: Impact of Changes in Depreciation Method?

[bharanir]

Dear All,

My Client was using oracle apps from 2006, they have created a Tax Book with Depreciation Method as Declining Method on 2006, Now their Management has decided to change the depreciation method to Straight Line Method.

For Eg: A Monitor is purchased for Rs.1000 on starting period 2006, based on which the depreciation calculated on declining method upto this period 2007.

Now the Client has created a new tax book and alloted Straight line method, so now they want at the time of running depreciation the system should take the original cost i.e. 1000 Rupees, not the depreciated cost done by declining method.

Please tell me, whether any possibility for this? or any workaround is there?


Regards
Bharani.

[k.khan]

hi bharanir
Good question,With the best of my knowledge or u may call it brain storming..many asset will remain in your assets book because the declining method never end the depriciation means cost can never be equal to depriciation amount and will bcome minimum...hence in this caseif u change the depriciation policy many assets will retire up or u can say that they will be fully depriciated asset or fully reserve asset
my opiniom is that you should fully dep all those assets manully and adjust manually if possible their depri amount or by mass reclassification but one thing is that the impact will not be the same if u have added the asset with same policy search it in the forum their is a question like of this

[raviteja.manchu]

Hi,

From Your requirement what i have understood is that,

In the old Tax Book your using Deminishing dep,now you want to retire and You have created a new Tax Book with Straight Line Method.So now u wnat to run the dep from the starting right.

If above is the requirement here is the solution:

For all the assets in the old tax book ,just change teh current cost to '0',then automatically all entried created before will be reversed.So now u can add the same in new Book and run the deprecialtion.


Hope i answered ur question.

Regards,
Ravi Manchu.

[bharanir]

Hi, Sorry, let me update you fully my client requirement.

For the Client, the corporate book is running through Straight Line Method and the Tax Book is running through Declining Method.

The Apps Started by Client on 2006, In Fixed Asset, and the Tax Book has been setup on Declining Method. Till now, the depreciation has run based on the declining method only for the tax book.

Now the Management has decided to change the depreciation method from declining to Straight Line for the Tax book in the year 2008.

They have created a new tax book and allotted to Straight Line Method on Jan 2008 in the test instance.

What they want is, at the time of running depreciation it should take the original cost and calculate through straight line method from the starting period, not the depreciated cost, also the depreciated cost arrived till now should not be change, it has to remain without any changes.

Means the asset cost Value arrived by running depreciation through declining method, there should not be any changes in that value. it should remain the same.

For Eg: A Furniture was bought for Rs.1000 for 5 life years on 2006, now the depreciation has already run based on declining method for 2 years till now for the tax book,

The Clients wants that the value which is derived through declining method for these two years should not be change, it should remain as it is.


Thatswhy, they have created a new tax book and allocated a new depreciation method i.e. straight line method, since the depreciation method is changed in the 3rd beginning year as Straight Line method, they want at the time of running depreciation the system should take the original value i.e. Rs.1000 also for full life years i.e. for 5 years not the remaining three years.


Please tell me, whether it is possible? Or any workaround is there? For the above issue



Regards
Bharani.







[quote]Hi,

From Your requirement what i have understood is that,

In the old Tax Book your using Deminishing dep,now you want to retire and You have created a new Tax Book with Straight Line Method.So now u wnat to run the dep from the starting right.

If above is the requirement here is the solution:

For all the assets in the old tax book ,just change teh current cost to '0',then automatically all entried created before will be reversed.So now u can add the same in new Book and run the deprecialtion.


Hope i answered ur question.

Regards,
Ravi Manchu.

<i><div align="right">Originally posted by raviteja.manchu