Depreciation Convention - First Year Convention - Not working

[former_member615153]

Hello,

I want to make use of First Year Convention as Depreciation Convention. However, the depreciation is getting computed for the entire period for assets purchased in the second half of the financial year. Below are my settings in "Depreciation Types-Setup Window"-

1. Method - Declining Balance

2. Depreciation Convention for acquisition - First Year Convention

Is there any additional setting that I need to do to get the intended result?

Regards,

Govind

[hdolenec · Accepted solution]

If your fiscal year is April 1st - March 31st, then it's not the same as calendar year. But never mind, that is not the problem. The problem is the fact that you are using year as sub-period. My guess is that the system in this case doesn't know when does the second half of the year start, so it can only depreciate from the beginning of period. When you are using months as sub-periods, everything seems to be working fine.

[former_member615153 · Accepted solution]

Hello,

Thanks for the input. After changing the sub-period to monthly, it worked fine. (apologies on calendar year)
One more query- For a particular asset which was purchased on 1st March 2021, In Depreciation Run, depreciation was correctly calculated for 6 months i.e from Sept to March 2021. However, I am unable to perform a Depreciation Run for Fiscal Year 2021-22. Even the planned depreciation is appearing as Zero in the Asset Master Data (Fixed Asset->Depreciation Tab).

[hdolenec · Accepted solution]

Did you perform fiscal year change? When you depreciate an asset to the end of fiscal year, you need to perform fiscal year change which transfers all the asset depreciations and balances from the current fiscal year to the new fiscal year. After this is done, you can depreciate it in a new fiscal year.

[hdolenec]

Hello,

Is your fiscal year identical to calendar year? Are you using months as sub-periods?
Also, can you tell what is exact capitalization date of this asset, and what is depreciation start date in depreciation parameters on fixed asset overview tab of asset master data?

[former_member615153]

Hello,

Thanks for the response. Please find my answers as below-

1. Is your fiscal year identical to calendar year? - Yes. It is set as 1st April 2019 to 31st March 2020;

2. Are you using months as sub-periods? - No. Set to year;

3. Also, can you tell what is exact capitalization date of this asset - 1st Dec 2019 (therefore it is put to use for less than 6 months)

4. What is depreciation start date in depreciation parameters on fixed asset overview tab of asset master data? - It is appearing as 1st April 2019. I am confused as to why it is set to 1st April 2019 since it should depreciate for 6 months (since the asset was purchased in the second half of the fiscal year)

Please tell me if I am missing something.

Regards,

Govind