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Question. ABZU is used when too much depreciation has been posted in previous fiscal years. But not because an asset was created in a previous financial year by mistake.
Wouldn't you need to adjust the BS and retained earnings for the incorrect values now? Or would all this be corrected by a normal EOY process in the current year after ABZU was done now?!
I think I have only done ABZU before when the "indexation" values given were to high.
Regards,
Waza
| | | ---------------Original Message---------------
From: Lara Charnock
Sent: Tuesday, October 04, 2011 6:37 AM
Subject: Asset Depreciation with Two Invoices of Different Dates
Hi
We have a situation where an asset invoiced was essentially posted in two parts. The first portion was posted with an invoice, and amounted to around 30% of the asset value. The asset had, however, not yet been delivered. Depreciation started at this point (October 2008).
The additional portion of the asset value was posted with an FI transaction directly to that asset, in October 2009.
The problem experienced is that the asset capitalization date reflects the initial 2008 posting, and the additional "value" posted in 2009 is causing the depreciation to be inflated. Strictly speaking the whole asset value should only have been depreciated since 2009.
Clearly a user error, but one which has only now come to light. The postings referred to are obviously in closed fiscal years already. Can anyone think of an elegant way to correct this. (We could "fiddle" the useful life to get to the desired depreciation value, but that does not strike me as ideal.)
Appreciate any words of wisdom.
Thanks,
Lara |
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