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How to Manually Depreciate Fixed Assets Effectively
Posted on: October 21, 2020 | By: Jarrod Kraemer | Microsoft Dynamics AX/365, Microsoft Dynamics Manufacturing
Are you interested in learning how to depreciate assets effectively so you can spread out costs and generate more revenue? Manual depreciation is a flexible depreciation method that is often used to define an extraordinary depreciation profile on the Books page, such as a non-periodic depreciation for special purposes (for example, tax). Depreciation is a periodic transaction that typically reduces the value of the fixed asset on the balance sheet, and is charged as an expenditure to a profit and loss account. You can set up and enter acquisition information for fixed assets, and then manage them by depreciating them and setting a capitalization threshold to determine depreciation. You can calculate adjustments to the fixed assets, and also dispose of them.
1. Set up a fixed asset depreciation profile and select Manual in the Method field on the Depreciation profiles page.
2. Select one of the values below in the Period frequency field on the General FastTab of the Depreciation profiles page.
- Yearly
- Monthly
- Quarterly
- Half-Yearly
- Daily
The depreciation of fixed assets that are assigned to the depreciation profile is determined by the percentage that you enter for each interval in the calendar year. The intervals are posted according to the selected value.
3. Click Manual schedules, and set up percentages for each posting interval.
Together, the manual schedules and the posting intervals define the depreciation amount. Manual depreciation is always calculated as a percentage of the acquisition price. For manual depreciation, the percentages that you enter in the intervals of the depreciation don’t have to add up to 100 percent.
Examples
Acquisition price: 11,000.00 Expected scrap value: 1,000.00 The following table shows the intervals and percentages that you set up on the Fixed asset depreciation profile schedules page.
EXAMPLES
| Interval number | Percentage |
| 1 | 10.00 |
| 2 | 50.00 |
| 3 | 8.00 |
The following table shows how the depreciation for each interval is calculated.
EXAMPLES
| Interval number | Calculation of the yearly depreciation amount | Net book value at the end of the interval |
| 1 | (11,000 – 1,000) × 10% = 1,000 | 10,000 (11,000 – 1,000) |
| 2 | (11,000 – 1,000) × 50% = 5,000 | 5,000 (10,000 – 5,000) |
| 3 | (11,000 – 1,000) × 8% = 800 | 4,200 (5,000 – 800) |
If you select Monthly in the Period frequency field, you set up 12 manual schedule intervals. The following table shows the depreciation amounts for the first two intervals.
TABLE 3
| Interval | Depreciation amount |
| January | (11,000 – 1,000) × 10% = 1,000 |
| February | (11,000 – 1,000) × 50% = 5,000 |
If you select Half-Yearly in the Period frequency field, you set up two manual schedule intervals. The following table shows the depreciation amounts for those two intervals.
TABLE 4
| Interval | Depreciation amount |
| June 30 | (11,000 – 1,000) × 10% = 1,000 |
| December 31 | (11,000 – 1,000) × 50% = 5,000 |
The total of percentages for all intervals doesn’t have to be 100. However, you receive a message if the value in the Cumulative percentage field on the Fixed asset depreciation profile schedules page isn’t 100.
Next Steps
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