Depreciation - Recording at written down value

Support Query

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How to record the Written Down Value of a depreciable asset?

Two options are available, which will be demonstrated below.

Option 1

This involves manual depreciation journals along with an adjusting journal to correct the market value of the depreciable asset.

1. Enter the asset purchase at its initial cost base value.
2. Enter depreciation journals to record the existing depreciable applied to the asset, posted to the linked depreciation sub-account (33400/InvestmentCode)
3. Enter an adjusting journal to bring the asset back to its correct value.

Note Option 1 is generally applied when entering the opening balance for a fund.

Option 2

SF360 allows the written-down value to be entered directly via Depreciation Schedule.

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Example: Fund set up as at 30/06/2020

• An asset was purchased on the 01/07/2016 at a cost of $100,000.
• Fixed depreciation of $5,000 per year.
• Accumulated depreciation was $15,000.
• Written down value is $80,000.

Option 1

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To record prior years' accumulated depreciation, the written-down value can be recorded in the linked depreciation sub-account (33400/InvestmentCode). 

Using the method below, depreciation that occurred in the Opening Balances period will display for comparative purposes however any additional accumulated depreciation will only be applied to the asset.

1.  Go to Fund > Fund Details and set the Financial Year to 01/07/2018 - 30/06/2020.
   
   This will allow you to post transactions in both the 2019 and 2020 FY.
   
   
2. Go to Accounting > Transaction List and select New Transaction > Depreciation
   
   Selecting the Depreciation journal type is necessary to apply depreciation to an asset.
   
   
3. Enter the following journal to record the Accumulated Depreciation prior to the 2020 FY:
   

   Date	30/06/2019
   Debit	$15,000	33400/InvestmentCode
   Credit	$15,000	Enter the relevant Asset's Code e.g. 77200/InvestmentCode

4. Repeat this process for the Depreciation that occurred in the 2020 FY
   

   Date	30/06/2020
   Debit	$5,000	33400/InvestmentCode
   Credit	$5,000	Enter the relevant Asset's Code e.g. 77200/InvestmentCode

5. Select New Transaction > Journal and enter a final journal to bring the asset back to its correct value:
   

   Date	30/06/2020
   Debit	$20,000	Enter the relevant Asset's Code e.g. 77200/InvestmentCode
   Credit	$20,000	49000/Profit and Loss Allocation

Once completed, ensure to change the reporting period in Fund Details back to the 2020 FY.

You can review the changes in the following reports:

• Operating Statement - Depreciation expense showing for comparative purposes.
• Trial Balance - Value in the Asset's account.
• Unrealised Capital Gains Report - Total Depreciation applied to the Asset.

 

Option 2

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Utilise the Depreciation Schedule to enter the opening written-down value.

Select Period Compliance under Compliance
Select Depreciation
Select New Asset to add

Confirm the following:

• Purchase Date/Purchase Price will be automatically calculated.
• Accumulated Depreciation Input $20,000.00
• Select the Depreciation Method.
• Input the Depreciation Rate and Opening Written Down Value. (In this example: 6.25% based on the Opening Value of $80,000 to arrive at the depreciation of $5,000)

Select  to finalise saving the opening balance.