Set Up Depreciation
Before you can use the Fixed Assets application area, you must enter certain basic depreciation information.
You must create depreciation books, and define various depreciation rules, integration with the general ledger and information that allows duplication of entries in several depreciation books. You must also define a default journal setup for each depreciation book.
Multiple Depreciation Books
You can set up multiple depreciation books to accommodate various kinds of depreciation. You can set up an unlimited number of depreciation books. For each depreciation book, you must decide whether it should be integrated with the general ledger. (If a book is integrated with the general ledger, all transactions posted to the depreciation book will also be posted to specific general ledger accounts.)
After you have set up the necessary depreciation books, you must attach at least one depreciation book to each fixed asset. You do this in the FA Depreciation Books window. Each combination of a fixed asset number and a depreciation book code is called an FA depreciation book.
You do not have to attach each depreciation book to all fixed assets. The individual fixed assets can therefore use varying numbers of FA depreciation books.
You can use various methods of depreciation for preparing financial statements and income tax returns. Many large corporations use straight-line depreciation in their financial statements because this generally permits reporting higher earnings. For income tax purposes, however, many businesses use an accelerated depreciation method.
The following table describes a sequence of tasks, with links to the topics that describe them. These tasks are listed in the order in which they are generally performed.
| To | See |
|---|---|
Set up multiple depreciation books to accommodate various methods of depreciation. |
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Set up multiple FA depreciation books to depreciate one or more fixed assets by several depreciation methods. |
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Attach a depreciation book to several fixed assets. |
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Learn about eight depreciation methods. |