Custom Depreciation Codes - Custom Codes Tab

Access this tab using Maintain>Fixed Assets>Custom Depreciation Codes.

Use this tab to set up a Code, including its Status and Description. The system supplies the following depreciation codes: Straight Line, Sum of the Years Digits, 150 Percent Declining Balance, 200 Percent Declining Balance, and No Depreciation Calculated.

Code: Enter a unique ID to represent the depreciation code, or select one from the drop-down list. We recommend using all numeric codes. Numeric codes are generally easier and faster to enter during transaction entry. We also recommend limiting your entry to strictly alphabetic characters (A through Z) or numeric characters (0 through 9), and avoiding the use of symbols, such as: | and ".

Status: Specify the status of the depreciation code. When creating a new code, accept the default status, A (Active), or select I (Inactive) or D (Discontinued) from the drop-down list. Below are valid status entries and their descriptions:

• Active (A) - Set a code to active when you want to use it throughout the system. Active codes appear on reports.
• Inactive (I) - Set a code to inactive when you do not want to use it regularly, but you still may need to use it at some point. A warning message appears when you attempt to use an inactive code. The warning message is for notification only; you can still use the code throughout the system. Inactive codes appear on reports.
• Discontinued (D) - Designate a designation code as discontinued when you no longer use it. You cannot select a designation code with a discontinued status; however, discontinued codes appear on reports.

Description: Enter or change the description for the depreciation code.

Standard Depreciation Methods: The system displays the predefined depreciation codes. You cannot edit these methods.

• Straight Line (SL) - This is the simplest method of depreciation. It is calculated by taking the Cost less the Salvage value divided by the Useful Life of the asset. The depreciation expense is roughly the same amount for every frequency during the life of the asset. You may want to use this depreciation method when an asset's usefulness decreases evenly over the life of the asset. Straight Line is used as the Switch To Depreciation Code (Maintain>Fixed Assets>Asset Types) when using an accelerated depreciation code.
• Sum of the Years Digits (SYD) - This method results in a decreasing depreciation charge based on a decreasing fraction of depreciable cost.

This is sometimes referred to as an accelerated depreciation method, because the depreciation expense is much higher in the beginning of the asset's life. You may want to use this depreciation method when the asset's usefulness decreases more rapidly at the beginning of the asset's life. The fraction's denominator is calculated using the following formula:

(n(n+1))/2 = SYD denominator

"n" represents the number of years to be depreciated. If you want to depreciate something for 5 years, the SYD denominator would be 15. Therefore, the first year depreciation would be calculated using the remaining asset's life (in full years) of 5 years divided by the SYD of 15 (5/15=33.3333%). The second year is 5 years divided by 15 SYD equaling 26.6667%.

• Declining Balance (DB150) - This method is a decreasing charge method that uses 1 1/2 times the straight-line rate. This is sometimes referred to as an accelerated depreciation method, because the depreciation expense is much higher in the beginning of the asset's life. You may want to use this depreciation method when the asset's usefulness decreases more rapidly at the beginning of the asset's life.
• Declining Balance (DB200) - This method is a decreasing charge method that uses 2 times the straight-line rate. This is sometimes referred to as an accelerated depreciation method, because the depreciation expense is much higher in the beginning of the asset's life. You may want to use this depreciation method when the asset's usefulness decreases more rapidly at the beginning of the asset's life.
• No Depreciation Calculated (NO) - This method does not calculate any depreciation. If you select this method, you do not need to enter any information in the Expenditure or Accumulated Depreciation Account boxes on the Maintain>Fixed Assets>Asset Types form.