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Special Tax Depreciation

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I have a scenario in which i have to configure special tax depreciation for reporting purpose only. To do so i have created a separate depreciation area and depreciation keys are maintained as well. The scenario is that i have to depreciation an asset on a special rate in the first year of its acquisition and on a separate rate for the remaining life of the asset. To achieve this i have configured multilevel depreciation for tax depreciation keys. system works fine as per the setting the only issue is instead of calculation depreciation on yearly basis its calculating them on period basis as mentioned below:

Deprecation for the first year 10% and 15% for the rest of the life. asset value 100,000 and capitalization date is 01.06.2016. Fiscal year is July to June.

As per my settings the system should calculate the depreciation for the first year as (100,000*10/100)/12 and post 833.33 for 12th period in fiscal year 2016.

For 2016 system should calculate depreciation as (100,000-833.33)*15/100) and post 14,166.7 for the complete year 2017. But instead system is calculating the depreciation as bellow

Depreciation for the remaining 11 periods of the 1st year  (100,000-833.33)*10/100)/12 = 763.88*11 = 8,402.78

Depreciation for the remaining 1 period of current F.year   ( 100,000-833.33)*15/11)/12 = 1239.58

So the total depreciation for fiscal year 2017 is shown in AW01N as (8,402.78+1239.58) which is wrong as per my requirement it should be 14.166.7 as shown above.

Any guidance on this how i can achieve this and what setting am i missing here.

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Answers (1)

Answers (1)

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The reason for this issue is because the first entry in multilevel method is valid for 1 year = 12 periods, that means, if depreciation start at 01.June 2016 (July - June), system will calculate 1 period depreciation with 10% in 2016 and 11 periods depreciation with 10% in 2017.

To realize this expectation, normally you need to develop a changeover method X, or Y, Z and implement it in BADI together with a depreciation key with 2 phases, one with 10% and 2nd one with 15% (not in multilevel).

Alternatively, you can use either of below workaround:

Solution A:
1, Create 2 depreciation key, one is with rate 10% and another one is with rate 15%
2, Create asset and assign depreciation key with 10% to it
3, After saving asset, use AS02 to double click on the tax depreciation area in asset master data, then click button 'more intervals' to add entry with start date 01 July 2016 and depreciation key with rate 15%.

Solution B: 
1, create depreciation with multilevel method
2, the first entry using rate 10% in multilevel is valid for 1 period only
3, Assign rate 15% in the 2nd entry in multilevel

* however, if the depreciation start date is 1 May 2016, you have to create another depreciation key in which the first entry using rate 10% is valid for 2 periods. such you need to create 12 similar depreciation key and use them depending on how many periods available in first year.