There is no need to tell the system to calculate depreciation, as the system recalculates depreciation automatically after every Asset Movement. So after posting the Asset Movements for the year, you may wish to print out a Fixed Asset Report showing the calculated cost and depreciation for all assets for the year. The option is Asset Summary > FAR Report.
The next step is to post the depreciation entries back to CCH Accounts Production. The option is Asset Summary > Post Depreciation.
For each Asset Class, Post Depreciation generates up to 3 journals:
- Depreciation Journal Debits: P&L account for Depreciation Charge. Credits: B/S account for Depreciation Charge. This entry represents the depreciation for the year.
- Revaluation Journal Debits: Depreciation on Revaluation. Credits: Revaluation Reserve. This entry eliminates the depreciation which has been charged to date on the asset that has been revalued. From this point depreciation will be calculated on the revalued amount.
- Profit/Loss on Disposal Journal Credits: Asset Cost of Disposals. Debits: Depreciation on Disposal. Debits: P/L on Disposal. This entry eliminates the cost and depreciation that has been charged to date on the asset, leaving both the cost and depreciation to be carried forward as zero.
- If Post Depreciation is rerun, the previously generated entries are replaced with newly calculated entries. For this reason the user should not edit entries generated by the Fixed Asset Register.
- The nominal accounts that are used for these postings are set up on the Asset Classes on the Set up screen.
- After running Post Depreciation, you may click on the Accounts Production tab to see the effect of the postings. The data in the Accounts Production tab is not immediately refreshed and you will still see the data from before posting depreciation. You need to click away to another screen in Accounts Production, e.g. the Trial Balance screen, to see the effect of the postings.