Simulating depreciation

This page allows you to simulate depreciation run and view its impact. Tell me more.

Select the “Simulate Depreciation” link under the “Asset Depreciation Processing” business component.

The “Simulate Depreciation” page appears.

The system displays the following fields in the “Simulate Information” group box:

Simulate Run No.	The number identifying the simulation run. This number is automatically generated by the system at the time of simulating depreciation.
Status	The status of the simulation run number. The various statuses are
	Processing
	Processed

Enter the following fields:

Depreciation Book Code	Use the drop-down list box to select the code identifying the depreciation book. All the depreciation books defined in the “Create Depreciation Setup” activity of the “Asset Depreciation Setup” business component. The system displays “Corporate” by default on launch of the page.
Default Depreciation Rule No.	The number identifying the depreciation rule (Alphanumeric, 20). The depreciation rule must have been defined for the asset class in the “Create Depreciation Setup” activity of the “Asset Depreciation Setup” business component.
	Help facility available.

Note: The system defaults depreciation rule is specified in the multiline.

Simulate Years	The number of years you want to simulate depreciation (Integer). Mandatory.
Numbering Type	Use the drop-down list box to select the numbering pattern in which the simulation run number has to be generated. The system lists all the numbering type of transaction type “Asset Depreciation Setup” for selection. The numbering type must have been defined in the “Create Numbering Type” activity of the “Document Numbering Class” business component.
Include Revaluation	Check the box to include the cost of an asset after revaluation for simulating depreciation.
	Example
	If the revaluation date of the Asset Tag is 20 Sep 2001, then the revaluation depreciation period would be 20 Sep 2001 to 14 Apr 2002, 15 Apr 2002 to 14 Apr 2003 and 15 Apr 2003 to 14 Apr 2004.
Include Suspension	Check the box to include suspension period if it has been set for an asset in “Process Depreciation” activity of this business component.

Note: Revaluation and suspension are applicable for the existing asset and not the new asset.

The system displays the following field:

Currency

The base currency of the company.

Enter the following fields in the “Simulate For Existing Asset” group box:

Finance Book	Use the drop-down list to select the code identifying the finance book. All the finance books mapped to the login organization unit where “Finance Book Processing” component mapped to this component is deployed are available for selection. The finance books must have been defined in the “Create Finance Book” activity of the “Organization Setup” business component. The system displays the first finance book by default on launch of the page.
Asset Class Code	Use the drop-down list box to select the code identifying the asset class to which the assets belong. All the assets defined in the “Create Asset Class” activity of the “Asset Type Definition” business component are listed for selection. The system displays “All” by default on launch of the page.
Depreciation Category	Use the drop-down list box to select the depreciation category. The system lists the depreciation category based on the asset class selected. The system leaves the field blank if all the asset classes are selected.
Asset No.	The number identifying the asset (Alphanumeric, 18). The assets must have been defined in the “Create Simple Asset” activity of the “Asset Capitalization” business component.
	Help facility available.
Tag No.	The number identifying the asset tag (Alphanumeric, 18).
	Help facility available.
Cost Center	The code identifying the cost center in which the assets are grouped (Alphanumeric, 10). The cost center must have been defined in the “Create Cost Center/Unit” activity of the “Cost Setup” business component.
Asset Location Code	The code identifying the asset location in which the assets are physically located (Alphanumeric, 20). The asset location must have been defined in the “Create Asset Location” activity of the “Asset Location” business component.
	Help facility available.
Analysis #	The code identifying the analysis number in which the assets are grouped (Alphanumeric, 10). The cost center must have been defined in the “Create Cost Center/Unit” activity of the “Cost Setup” business component.
Subanalysis #	The code identifying the subanalysis number in which the assets are grouped (Alphanumeric, 10). The cost center must have been defined in the “Create Cost Center/Unit” activity of the “Cost Setup” business component.

Click the “Get Details” pushbutton to retrieve the asset details in the multiline.
Enter the following fields in the “Simulate For New Asset” group box:

New Asset Description	Any textual description pertaining to the new asset for which you want to simulate depreciation (Alphanumeric, 40).
New Asset Cost	The cost of the new asset for which the simulation depreciation has to be processed (Integer).
New Asset Salvage	The scrap or the recoverable value of the new asset.
Proposal No.	The number identifying the asset proposal based on which the capital purchase order has been raised (Alphanumeric, 18). The asset proposal must have been defined in the “Create Asset Proposal” activity of the “Asset Planning” business component.
	Help facility available.

Note: If the proposal number is entered, then the proposal amount will be taken as the cost of the new asset.

In-Service Date From	The date from which the assets are put into effective use (Date Format). If this date is entered, then the system defaults the in service date in the multiline. The system defaults the system date on launch of the page.
	Example: If the simulate years is three and if the In-service date is 15^th April 2001, then the depreciation processing period would be 15 Apr 2001 to 14 Apr 2000, 15 Apr 2002 to 14 Apr 2003 and 15 Apr 2003 to 14 Apr 2004.

Click the “Get Details” pushbutton to retrieve the details.

The system displays the following fields in the “View Statistics” group box:

Assets Selected	The total number of asset selected for simulating depreciation.
Tags Selected	The total number of asset tags selected for simulating depreciation.
Records Selected	The total number of records selected for simulating depreciation. The system displays the product of the number of tags by simulate years.

The system displays the following fields in the “Assignments” multiline:

Depreciation Category	The code identifying the depreciation category to which the assets are assigned.
Asset Description	The textual description pertaining to the asset.

Enter the following fields:

You can apply three depreciation rules at a time to simulate depreciation and view its impact. The feasible rule can then be applied for actual processing.

Depreciation Rule No. 1	The number identifying the depreciation rule (Alphanumeric, 20). The depreciation rule must have been defined for the asset class in the “Create Depreciation Setup” activity of the “Asset Depreciation Setup” business component.
	Help facility available

Note: The depreciation rule must not be left blank, if the asset description is specified.

Depreciation Rule No. 2	The number identifying the depreciation rule (Alphanumeric, 20). The depreciation rule must have been defined for the asset class in the “Create Depreciation Setup” activity of the “Asset Depreciation Setup” business component.
	Help facility available.
Depreciation Rule No. 3	The number identifying the depreciation rule (Alphanumeric, 20). The depreciation rule must have been defined for the asset class in the “Create Depreciation Setup” activity of the “Asset Depreciation Setup” business component.
	Help facility available.

Note: The rule 1, rule 2 and rule 3 must be unique.

The system displays the following fields:

Asset Cost	The cost of the asset.
Salvage Value	The scrap value of an asset.
In Service Date	The date from which the assets are put to effective use.

Check the box in the “Select” column of the multiline to mark the asset details.
Click the “Simulate” pushbutton to simulate depreciation.

Note: Atleast one row must be marked for simulation.

The statistics information must also be available before simulation.

If the number of records exceeds the batch size defined in the “OU Process Parameter” business component, then the simulation must be run in batches.

The system generates a unique simulation run number based on the numbering type. The system updates status of the simulation run number to “Processing”. The system calculates depreciation for each selected assets and asset tags for each processing period. The system calculates depreciation for suspension period. The system derives rates for the diminishing balance method.

Calculating asset tag cost

The system picks up the asset tag cost for the in-service if the asset is the existing asset or the new asset cost if the asset is the new asset. The asset cost will be the difference between the asset tag cost and the salvage cost, if the depreciation basis is the difference between the asset cost and the salvage. If the revaluation depreciation hast to be processed, then the cost would be revaluation cost.

Calculation of depreciation

The system calculates the depreciation for each asset/tag and in service date as (the product of rate, period, cost and business use percentage) / 360 or 365 or 366. The system retrieves the rates if defined under the rate ID with the effective and the expiry date. The system calculates the suspension depreciation if the suspension period has been set for an asset.

The system calculates the maximum and minimum depreciation for the period, if the maximum and minimum depreciation has been defined in the rule. If the depreciation processed is greater than the maximum depreciation for period, the assets depreciated till the maximum depreciation. If the processed depreciation is lesser than the minimum depreciation for period, minimum depreciation is charged for the asset.

The system calculates depreciation if rate is not provided based on the following formula:

Depreciation = Cost of the asset * period * business use % / useful life of the asset / 360 degrees or 365 or 366.

The system calculates depreciation for an existing asset if the suspension flag is set as “Yes” based on the following formula:

Suspension Depreciation = Rate * Suspension Depreciation Period * Cost * Business Use % age / 360 or 365 or 366 days

The system updates the depreciation as the maximum depreciation simulated for the year if the processed depreciation is greater than the maximum depreciation.

Click the “Batch Simulate” pushbutton to simulate depreciation in batches.

Note: If the number of documents exceeds the number specified in the “OU Process Parameter” activity, then the depreciation must be processed in batch.

If the “Allows Depreciation below Book Value” parameter is set as “Yes”, then the cumulative depreciation must not exceed the asset tag cost..

The system generates the simulation run number based on the numbering type. The system saves the new asset and its details. The system updates the status of the asset / tag combination to “Processing”.

To proceed, carry out the following

Select the “View Processing Status” to view the simulation processing status of an asset.
Select the “View Simulation” link at the bottom of the page view simulation details.
Select the “View Suspension Period” link at the bottom of the page to view the suspension period set for an asset.
Select the “Function Defaults” link at the bottom of the page to view the function defaults.
Select the “View Rules” link at the bottom of the page to view the depreciation rules before running the simulation depreciation.

Simulating depreciation – An overview

You can simulate depreciation book wise. This page also allows you to simulate assets in batches. You can apply three depreciation rules for an asset at a time and view its impact. You can ease data entry by giving the default depreciation rule number. The number of years for which the depreciation must be simulated must be specified. You can include the cost of the asset after revaluation and the suspension period set for an asset while simulating depreciation.

This page allows you to simulate depreciation for the existing asset or you can define a new asset and then simulate depreciation. You can also specify the number identifying the asset proposal and take the proposal cost as the cost of the new asset for simulation. For retrieving the existing asset, you can carry out the search using the code identifying the finance book, the code identifying the asset class, the depreciation category, the code identifying the asset and the asset tag and the code identifying the asset location in which the assets are physically located. You can also view the number of assets, asset tags and number of records selected for simulation.

The system automatically generates a simulation run number based on the numbering type selected. The system updates the status of the simulation run number to “Processing”.