NetAsset - Grouped Depreciation: Transactions
Overview
The following table summarizes how each transaction stage behaves for grouped depreciation assets compared to standard assets.
| Transaction Stage | Standard Assets | Grouped Depreciation Assets |
|---|---|---|
| Asset Creation | Individual asset record created | Same — individual asset record created |
| Schedule Generation | Schedule lines generated for the entire life of the asset | Generation process is the same, but there will only be one line generated for the capitalization schedule line. Schedule lines are generated every period as the depreciation journal is created. |
| Ready to Capitalize | Asset status set to Ready to Capitalize | Same — asset status set to Ready to Capitalize |
| Capitalization Journal | Individual journal entry per asset | Same — individual capitalization journal entry per asset |
| Depreciation Journals | Individual depreciation journal entry per asset | Single group journal entry covering all assets of the same asset type and subsidiary for the period |
Running Grouped Depreciation Journals
Navigate to NetAsset > Process Monthly Journals > Run Monthly Asset Journals. In the drop down for Transaction Type, select the new option for Grouped Depreciation.
- When an asset is flagged for grouped depreciation, the Depreciate button on the asset record navigates to this page with grouped depreciation type already selected.
Assets are grouped for processing by a combination of subsidiary and asset type. All assets within a group that have not yet been processed for the period are included in the journal calculation.
When the box Run All Months Up To and Including is checked, rather then showing individual lines for each period included, new columns for Run From and Run Through show you which months will be included in the processing.
Click Create Journals. This will trigger the creation of the depreciation expense transactions, create new schedule lines for every asset record included, and tag the transaction to the schedule line.
The transaction breaks out the lines for any GL posting segments (Department, Class, and Location, etc). The Memo field includes detail on the ending balance total dollar amount considered in the calculation for depreciation expense and the rate used from the Asset Type record.
A new subtab will show on grouped depreciation transactions to assist with reconciliation of the amounts. Click the Grouped Detail subtab to navigate to a list of assets, their gross balance, and associated depreciation expense included in the total amount on the transaction.
Grouped Depreciation Calculation Methods
The depreciation amount for a group is calculated using the depreciation method and formula defined on the asset type record. The asset type record controls which basis method is used when computing the group depreciation amount. Two calculation options are available:
- End-of-Period Basis: The group depreciation amount is calculated using the net book value of each asset as of the end of the depreciation period. The total end-of-period balances across all assets in the group are used as the depreciable basis.
- Average Basis: The group depreciation amount is calculated using the average of each asset's net book value across the period — specifically, the average of the beginning and ending net book value balances. This smooths the depreciable basis over the course of the period.
Once the total group depreciation amount is determined, it is allocated to each individual asset within the group on a pro-rata basis, proportional to each asset's share of the total group basis. Each asset's schedule line is updated with its allocated depreciation amount, and the group-level journal entry records the aggregate impact.
The journal entry posts a debit to the Depreciation Expense account and a credit to the Accumulated Depreciation account as defined on the asset type record.
Disposals of Grouped Depreciation Assets
When a grouped depreciation asset is disposed of, the disposal journal entry is handled differently from standard asset disposals.
Regardless of how long the asset has been in service, the entered disposal amount for the Asset Value is what will post for the Asset Account and the Accumulated Depreciation account. No Gain/Loss is ever calculated on disposal of an individual asset.
This behavior is the same regardless of if an asset is fully diposed or partially disposed.
This behavior reflects the nature of grouped depreciation, where assets are tracked collectively and individual asset-level depreciation history is maintained only as an allocated share of the group total.
Limitations/Callouts
The following transaction types and processes are not supported for assets flagged for grouped depreciation:
- Revaluations: Prospective, write-up, write-down, and true-up revaluation types are not supported for grouped depreciation assets.
- Transfers: Supported. GL impact is the same as the disposal impact above. Prior period transfers are not supported.
- Disposals: Prior period disposals are not supported.
- Splits: Asset split processing is not supported for grouped depreciation assets.
- On Hold: Placing a grouped depreciation asset on hold to pause depreciation is not supported.
- Usage-Based Depreciation: Usage-based depreciation methods are not compatible with the grouped depreciation process.
- Alternate Schedules / Multi-Book: Grouped depreciation processing applies to the primary depreciation schedule. Alternate schedule (multi-book) processing through the grouped depreciation workflow is not supported.
Considerations
- The grouped depreciation flag is driven by the asset type record. If the depreciation method assigned to the asset type is itself a grouped method, the grouped checkbox on the asset type is locked and cannot be unchecked.
- Assets are grouped by the combination of asset type, subsidiary, and period start date. Assets of the same asset type but different subsidiaries will be processed in separate groups and generate separate journal entries.
- If the total calculated depreciation amount for a group is zero or negative, no journal entry is created for that group in that period. A schedule line will be created with a zero dollar depreciation expense.
- The capitalization journal for grouped depreciation assets are processed individually per asset, consistent with the standard capitalization process. Only depreciation journals are aggregated at the group level.
