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Reply from SAP_EZ on Dec 23 at 12:04 PM Lengthening the service life will have the effect of reversing excessive depreciation recognized previously. Some allowed methods are faster than others, however the organization is expected to pick the one that comes close to actual reduction rate of service utility through the years. (This is very unlike the rules for statutory income tax depreciation rates, where very fast reduction is allowed to spur the economy or to meet other national objectives. So be sure to do this only in your financial depreciation areas, not also in your income tax depreciation areas IF those are derived in SAP).
Cr expense
Dr accumulated depreciation
If the amount is material, do not restate prior years if US GAAP - but put an explanatory comment in the Notes to the Financial Statements. There is a particular note devoted to fixed assets, depreciation, asset roll forward, service life estimate ranges for each asset class. I am speaking here of US GAAP, but I imagine IFRS and other comprehensive rules have a similar note required for fixed assets. If the amount is not a material amount, no note required.
Regards
| | | ---------------Original Message---------------
From: Patrick NAMBORE
Sent: Monday, January 31, 2011 6:26 PM
Subject: Fully Depreciated Assets
We at Telikom PNG Limited are also using SAP to account for our fixed assets. What is the best practice to deal with the zero book value assets or fully depreciated assets. We understand that we have to dispose/scrap the assets, however we have some assets which are fully depreciated and are not physically available. Please advise accordingly. |
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