Recently I discovered that you better create your accounting periods before you start depreciating your fixed assets. It could seriously affect the calculation of the depreciation amount, but how?

 

First of all, if you do not create an accounting period, then Microsoft Dynamics NAV 5.0 will try to appoint your depreciation to the last existing accounting period, resulting in a depreciation over more than 360/365 days. This could be a problem if your depreciation book does not allow depreciation over more than 360/365 days. If you have already SP1 installed, you will be notified of this issue when you run the report Calculate depreciation by the following warning:

 

 

Even if your depreciation book allows depreciation over more than 360/365 days, a second problem occurs when you are using the depreciation method of declining balance with a switch to straight line. Microsoft Dynamics NAV 5.0 SP1 will remain to depreciate according to the declining balance method.

 

Let's take a look at the following example, with a fixed asset that is setup as follows:

 

 

The expected depreciation:

Straight line : 1.000 * 0,2 = 200

Declining balance:            

Y1:    1.000 * 0,4 = 400

Y2:      600 * 0,4 = 240

Y3:     360 * 0,4 = 144 < 200 The switch is made from declining balance to straight line.

Y4:     160

 

If you haven't created the correct accounting periods, the following depreciation will calculated:

Y1: 400

Y2: 240

Y3: 144

Y4: 86,4

…

 

 

So make sure you have those accounting periods setup, before calculating your fixed asset depreciation!

 

 

 

Comments

[captive insurance company]

But why, exactly, does it continue to depreciate according to the declining balance method? Its always the why that gets me!