Capital Asset Depreciation

Overview

The Capital Asset depreciation process calculates and posts depreciation entries to the General Ledger and updates assets depreciation information. Depreciation is calculated on eligible assets from the Asset Depreciation Date over it's useful life based on its Asset Type. Depreciation is calculated looking forward to account for changes in an assets life or value. 

NOTE: Prior to the first scheduled run of the new fiscal year, the resetAssetDepreciationForFiscalYearJob must be run. This job will clear depreciation from the monthly buckets and update the Previous Year Amount field.

Asset Depreciation Date and Convention

The Asset Depreciation Date is set based on the Assets Inservice Date and the values in the Asset Depreciation Convention table. If you would like for Assets to be depreciated using the Half Year or Full Year convention, then you would add those sub-types to the Asset Depreciation Convention table with the appropriate convention. 

The Asset Depreciation Date for assets purchased on object codes with sub-types NOT in this table will be the Assets In-service date. 

The Asset Depreciation Date for full year (FY) assets is set to 7/1 of the fiscal year the asset was placed in service, Half Year (HY) assets depreciation date is set to 1/1 of the fiscal year they are placed in service. A full 6 months or 12 months will be take in the first and last year regardless of the In-service date. 

Asset Useful Life

The Asset Type table determines the Asset's useful life based on the Asset Type code that is assigned to the asset. To prevent certain assets from being depreciated, such as, Construction in Progress (CIP) or Fabrication, you can create an Asset Type with a 0 useful life. Once the asset is placed in service, you can update the Asset Type so that it will start depreciating. 

Year End and Off-Cycle Runs 

Depreciation can be run multiple times in the same period using the DEPRECIATION_DATE and BLANK_OUT parameters. The depreciation job will only depreciate those assets that have not been depreciated yet in that period. To depreciate assets in the prior fiscal year, set the In-Service date to a date in that fiscal year and run an off-cycle depreciation. The DEPRECIATION_DATE parameter is typically populated during year end to support year end activities or to run depreciation off cycle. Refer to the article:   Year End and Off-cycle Depreciation for more information. 

Calculation

Depreciation is determined based on the asset's remaining useful life in order to spread depreciation out evenly over an assets life taking into consideration changes in value or life. Depreciation is calculated for each payment. The two depreciation methods are as follows.

Straight Line

Depreciation Expense = ((Asset Cost - Accumulated Depreciation) * Depreciation Period) / (Remaining useful life in months)

Salvage Value

Depreciation Expense = ((Asset Cost - Salvage Value - Accumulated Depreciation) * Depreciation Period) / (Remaining useful life in months)

Depreciation is calculated for each asset payment that is eligible for depreciation and can be run monthly, quarterly, semi-annually or annually as defined by the DEPRECIATION_PERIOD parameter.

CAMS Depreciation runs on the third Thursday of the month. Depreciation is calculated when the fiscal period is a multiple of the value in the DEPRECIATION_PERIOD parameter. For example, if you are running deprecation quarterly, the value in the parameter will be set to 3. Each month the calculation will check to see if the fiscal period is a multiple of 3 and if it is, will calculate depreciation. When depreciation is calculated, the CAM depreciation process will create the Capital Asset payment for the fiscal period when depreciation was run.

Assets excluded from Depreciation

• Payments with Object Sub Type Codes in parameter FEDERAL_OWNED_SUB_TYPES
• Payments with an Asset Transfer Payment Code of Y
• Retired and inactive assets
• Assets with Asset Status Codes in parameter ASSET_STATUSES_EXCLUDED
• Assets pending retirement (Asset Retirement Global document is enroute) 

General Ledger Entries 

The depreciation job generates pending General Ledger entries which are processed in the next nightly batch cycle. Asset depreciation information is updated immediately. Entries are created as follows: 

• The Organization assigned to the Account used on the asset payment determines the chart and account: 
  • When the Object Sub Type Code is in parameter ORGANIZATION_SUB_TYPES, use the Organization Plant Fund Chart and Account number
  • When the Object Sub Type Code is in parameter CAMPUS_SUB_TYPES, use the Campus Plant Fund Chart and Account number
• Depreciation Object Codes are determined by the Asset Object Code table. 

If the DEPRECIATION_DATE parameter is set to run depreciation as of the end of June and Accounting Period 12 is closed, General Ledger Pending Entries will be created in period 13. If period 12 is open, the entries will be created in period 12. 

CAMS Depreciation Report

The assetDepreciationJob creates a pdf report called CAMS_DEPRECIATION_REPORT<date time stamp>.pdf. It’s located in the Batch File /reports/cam folder. The CAMS Depreciation Report includes the document number used to identify the entries, the fiscal year and period in which the entries will post and before and after depreciation information.