Fixed Asset - Custom Report for 1st year Depreciation Day Calculation

Hi all,

I have tried creating a Fixed Asset custom report in order to help calculating the 1st year depreciation days (since Manager is not yet auto-calculating the depreciation days based on purchase date) but was not able to.

Basically i wanted to create a custom report that would show:

Purchase\Invoice Date / Invoice Number / FA Item Code / FA Item Name / FA Control Account / Unit Price\Acquisition Cost / QTY / Total Amount\Acquisition Cost / Depreciation Rate

I believe this report would help many of us to easily calculate the 1st year FA depreciation by simply exporting this report to excel and have only one formula to calculate the days between Purchase\Invoice Date and Year End Date, unless @lubos could add a last column ( Depreciation Days ) to this report for the system to calculate the days between Purchase\Invoice Date and an Input Date ( Year End ).

Thank you.

It would be much easier to add custom fields to the fixed asset definitions themselves, set to show as columns. Then export the fixed asset list itself and add your depreciation days calculation. See https://www.manager.io/guides/7277 for an example.

Hi @Tut, thank you for the example link, but unfortunately i am not able to use it because i have fixed assets that are the exact same item but purchased in different dates, so i use the same FA when purchasing multiple times otherwise i will have to create thousands of “the same” FA.

Example:
Dell 100 Computer: 1 unit purchased 01/02/2019
Dell 100 Computer: 3 units purchased 10/07/2019
Dell 100 Computer: 2 units purchased 05/09/2019
…and the same item (i.e.: Dell 100 Computer) will not stop being purchased because i lease them, so these FA’s are actually a business i have.

Any thoughts around this?

Thanks.

That is incorrect accounting practice. Some accountants might consider it acceptable to lump a group of assets together when they are placed into service simultaneously, can reliably be expected to be retired on the same date, and have identical depreciation rates and methods. But mixing acquisition dates is not acceptable. In Manager, you would create a unique fixed asset for each lot of computers you purchase that share essential characteristics, then depreciate all lots individually. But this would also prevent you from retiring one broken computer from the lot. Instead, you would have to keep it around until the scheduled retirement of the entire lot.

More realistically, since you will likely lease computers at different times to different customers, they will experience different levels of wear and tear, and it will become necessary to retire and replace them individually. Further, when it comes to verifying them for tax or simple property management control reasons, you will be identifying and tracking them individually. So it would be much better if each computer were a separate fixed asset. Honestly, your worry over eventually having thousands of similar fixed assets means your business will be prospering. And only the most recent computers will remain as active fixed assets. When they reach the end of their useful lives, they will be disposed.

Of course, all this ignores the question of whether the computers must be considered as fixed assets in the first place. That question must be answered based on local rules concerning what must be capitalized. It is possible these computers could be treated as consumable supplies, depending on their cost and expected life.

From an accounting perspective, not sure why this needs to be the case. If you have three computers as one fixed asset lot and one dies, then you can adjust the fixed asset lot (cost and depreciation) by a third and the remaining two computers would continue on as the fixed asset lot.

To do otherwise would mean that you are overstating the book value of the actual assets.

I suppose this is technically true, but there would be challenges:

  • It would require negative adjustments by some means to the acquisition cost of the removed asset.
  • You would, as you noted, have to simultaneously offset all depreciation to date for that asset to avoid overstating book value.
  • Those adjustments might be prohibited by local capitalization and depreciation rules.
  • Retroactively adjusting acquisition costs and depreciation would invalidate prior accounting periods’ results.
  • There would no longer be any built-in process for recording gain or loss upon disposal.
  • This would be such an unconventional approach, I think it would be difficult to explain to an auditor or gain approval.

As a result, I would never go down that path.

The cleanest way of documenting it I suppose may depend on how the majority items are treated. If usually all of a lot is disposed of at the same time, keeping the lot grouping may reduce the bookkeeping effort. If items are mostly disposed of at different times or otherwise modified to become no-identical during their life, starting as individual items maybe more efficient.

In @Inline case, if typically a computer lot all goes to one customer with limited knowledge of individual items till all are returned at the end of the lease, keeping the grouping maybe most efficient. If individual computers in a lot often go to different customers, or orders to one customer maybe supplied from different lots, splitting the lots to individual computers is going to be cleaner.

It may also depend on how computer assets are normally tracked in an organization. Attaching other documentation to individual asset entries maybe useful.

As Manager does not support disposal of part of an asset, I assume to actually do it in manager would involve (as @Brucanna indicated above) entries dated the disposal date to acheive:

  • A negative asset entry of one original new computer value
  • And depreciation adjustment within the limitations described here

However it does get a bit confusing simultaneously updating the book value, Current assets purchase price, accumulated depreciation, and loss on disposal. Particularly given Manager does not allow journal entries or payment / receipts to Fixed assets, accumulated depreciation" and “Fixed assets, loss on disposal”

I guess I will have to properly work out a clean way of doing it, if any of my combined assets are not disposed of together.

Edit 3
Deleted lots of wrong assumptions

Actually there are no challenges nor unconventional approaches.
For the dead asset it doesn’t require any negative adjustments to the acquisition cost or the accumulated depreciation, nor will it’s disposal have any impact on prior accounting periods. Furthermore, the recording of a gain or loss would be continued to be maintained by the current built-in Manager process. Lastly, I don’t know of any auditor who wouldn’t understand the removal of a dead asset which is a component of a group asset.

Manager can support the disposal of a part asset (or the salvaged components).
1 - you transfer via a zero total New Receipt the “book value” of the surviving (good) asset from the current asset listing to a new asset listing. (assuming diminishing value depreciation)
2 - Then for the current asset listing you do a disposal using the existing process which will allocate the dead assets loss to the P&L.

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That is a smart idea given Managers asset management functionality.

Thinking about it, if required the original asset value and depreciation could also be transferred to the new listing if required by:

  1. Transferring the original value of the component of the asset being retained (using @Brucanna method above)

  2. Transfer the past depreciation of the component of the asset being retained (via a negative depreciation entry for the old listing and an equal but positive depreciation entry for the new listing).

  3. Dispose of the remaining asset in the old listing (as described by @Brucanna above).

Edit
Steps 1 & 2 above split one asset into two in a cost neutral fashion. This is most cleanly done on the same day a business last allocated it’s asset depreciation (thus avoiding the need for any additional or partial period depreciation calculations). The user is also free to decide which assets are move to the new Manager asset entry (ie the part to be disposed or the part to be retained).

After steps 1 & 2 are done, either the new or original asset group could be disposed by Managers normal method, dated the day the asset disposal occurs.

That alternative would be suitable if Prime Cost depreciation was required

A post was split to a new topic: Disposing of a part of a fixed asset - worked example