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If assets are idle, then charge no depreciation to any cost center. This is analogous to charging depreciation based on units of production, when there were no units produced.
If you have assets not fully depreciated, but they are also of no more use to you - then you may have an error in your estimate of service life.
Be sure you are not trying to record depreciation expense on assets used in production, if the charges are truly direct costs of sales. Try to assign logically over time, matching revenue.
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| | | ---------------Original Message---------------
From: moiz uddin
Sent: Wednesday, October 12, 2011 3:13 PM
Subject: Fixed Assets Depreciation on Basis of Project Life
Dear friends,
Please answer my question about fixed assets depreciation.
My company has multiple projects and its duration is different from project to project.
Whenever we are purchasing any fixed assets we are charging to the particular project cost center the total fixed assets cost as well depreciation expenses but for example say vehicle's life is 4 years and project life is 2 years. Depreciation for 2 years is 50% which we already charged to project and the project is completed and closed. I would like to know what we will do with the depreciation expenses still remaining 50% value and we kept idle since 2 months and then transferred to another project. Where should we charge the depreciation for idle time 2 months for which cost center? Please if you can, I would be thankful to you. |
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