NetAsset - Configure Depreciation Methods
Overview
NetAsset supports a variety of depreciation methods, each definable by formula or custom table. The most common depreciation methods are included within the NetAsset bundle:
- Straight Line
- Non-Depreciating
- Double Declining Balance
- Usage Based
If none of these meet your needs, custom depreciation methods can be configured. Existing methods can also be inactivated when no longer needed. To create an additional depreciation method, follow the steps below.
Step By Step Process
- Navigate to NetAsset > NetAsset Setup > Manage Depreciation Methods
- Select New NetAsset Depreciation Method to bring up the depreciation method setup page
- Complete the form using the field reference table below.
- At minimum, provide a name, posting and calculation intervals, and either a depreciation formula or a depreciation table with percentages that sum to 100%.
- Save the Record.
| Field | Description | Example |
| Name | Enter a name for this depreciation method. | Straight Line |
| Description | Optionally enter a description for the depreciation method. | Main method used for depreciating assets. |
| Override Depreciation Convention | Typically defaulted in from asset type, but can be overridden on the depreciation method here: Full Period: Depreciation calculated for full period at start and in all subsequent periods. Mid Period: Half period depreciation at start and end. Full depreciation for all other periods. Mid Month Cutoff: Full depreciation if in-service by 15th, else starts next period. Full depreciation thereafter. Next Period: Depreciation starts period after in-service. Full depreciation thereafter. Prorated Period: Depreciation based on exact days in first and final periods. Full depreciation between. Half Year: Six months depreciation in first and final years, regardless of start date. Full year between. | Full Period |
| Override Disposal Convention | Default the disposal method to be used on disposal of asset. Full Depreciation: Depreciation is calculated for the full period when the asset is disposed. Half Depreciation: Depreciation is calculated for half the period when the asset is disposed. Zero Depreciation: No depreciation is recorded in the period prior to the disposal. Prorated Depreciation: The amount of depreciation in the period of disposal is pro-rated based on the number of days the asset is active during the interval. Mid Month: The amount of depreciation in the month of disposal is the standard monthly depreciation divided by 2. (Tax Required Method) Mid Quarter: Depreciation calculated on an annual or quarterly basis can have a mid-quarter disposal method. The disposal month's quarter will received half of the standard quarter's depreciation. For example, disposal in July falls in Q3, so depreciation for the year will be the normal depreciation for the year divided by 8*5. (Tax Required Method) | Full Depreciation |
| In-Service Formula | The depreciation formula applied from the in-service date. See the abbreviation key for formula syntax rules in screenshot above. | (INB - RV) / IUL |
| Post-Modification Formula | The depreciation formula applied following a modification. See the abbreviation key for formula syntax rules in screenshot above. | (NB - RV) / UL |
| Extended Life Formula | The depreciation formula applied once the asset has passed its original useful life. See the abbreviation key for formula syntax rules in screenshot above. | (NB - RV) / UL |
| Depreciation Posting Interval | How frequently depreciation is calculated. Relevant for formula-based methods only. | Monthly |
| Depreciation Calculation Interval | How frequently depreciation is calculated. Relevant for formula-based methods only. | Monthly |
| Calculated Useful Life | When checked, the asset's useful life is derived from the depreciation drawdown rather than set manually. | Checked |
NOTE: The number of periods on Depreciation Tables are assumed to match the Useful Life on assets where the Depreciation Method is used. If they differ, the number of periods on the Depreciation Table will override the Useful Life on the Asset.
Configuring Tax Depreciation Methods in Mass
The NetAsset Automatic Import of Tax Depreciation Methods feature enables users to import tax depreciation methods directly into NetAsset without manual CSV imports. This streamlined approach is designed for users leveraging alternate schedules or the Tax Complete add-on within NetAsset.
Automatically Apply Correct Tax Disposal Conventions
Populate the Override Disposal Convention field on the tax depreciation methods to have NetAsset auto-apply the correct disposal methods. They will download in automatically when creating tax depreciation methods through the Import Tool.
Tax disposals typically follow the depreciation logic. For example real estate has half a month of depreciation at in service and has half a month of depreciation for the disposed month aka Mid-Month Disposal Convention. Mid-Quarter and Half-Year MACRS methods should also use mid-quarter and half-year disposal conventions.
Verify the System Setup has the box for Automatically Update Tax Schedules = checked and Ignore Disposals on Alternate Schedules = unchecked in order to have NetAsset auto-apply the disposal conventions.
Manually Uploading Depreciation Methods in Mass
If you need to add depreciation methods that aren't included in the NetAsset bundle or the Automatic Import of Tax Depreciation Methods, you can create them in bulk using a CSV import. This requires two separate uploads: one to create the depreciation method records, and a second to attach their table lines.
Step by Step Process
Step 1: Import Depreciation Method Records
Create a CSV file with the following columns and import it using the settings below.
| Field | Example |
| Name | Straight Line |
| Description | Main method used for depreciating assets. |
| Depreciation Posting Interval | Monthly |
| Override Depreciation Convention | Full Depreciation |
- Import Type: Custom Records
- Record Type: NetAsset Depreciation Method
Step 2: Import Depreciation Table Lines
Once the depreciation method records exist, create a second CSV file to import their associated table lines. The Depreciation Method column must reference the method created in Step 1.
| Field | Notes |
| Depreciation Method | Must match the Name from Step 1 |
| Period | |
| Percentage | Percentages across all periods must sum to 100% |
| Rounded |
- Import Type: Custom Records
- Record Type: NetAsset Depreciation Table Line
