How to record the Written Down Value of a depreciable asset?
Two options are available, which will be demonstrated below.
This involves manual depreciation journals along with an adjusting journal to correct the market value of the depreciable asset.
- Enter the asset purchase at its initial cost base value.
- Enter depreciation journals to record the existing depreciable applied to the asset, posted to the linked depreciation sub-account (33400/InvestmentCode)
- 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.
SF360 allows the written-down value to be entered directly via Depreciation Schedule.
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.
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.
- 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.
- Go to Accounting > Transaction List and select New Transaction > Depreciation
Selecting the Depreciation journal type is necessary to apply depreciation to an asset.
- 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
- 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
- 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
- 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.
Utilise the Depreciation Schedule to enter the opening written-down value.
|Select Period Compliance under Compliance|
|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.