Hi Gurus,
I have a scenario here:
An asset was purchased on 2008 with APC value '14392.72' and with a useful life of 5 years with a straight line 20% depreciation. Thus 20% of 14392.72 equals to 2878.54 every year. But in the year 2010 client added the APC value of the asset by '1352.00' thus making the APC value '15744.72'.
Now from the year 2011 system started calculating depreciation for the asset as shown below:
20% of New APC value (15744.72) = 3148.94
for the year 2012 also system calculated the same amount for depreciation of the asset 3148.94.
And thus even though by 2012 the asset should have depreciated fully..there was a NBV of 811.22 after the 2012 year end.
And when the client did the depreciation run for the year 2013 there was a depreciation posted for the amount 811.22 against the asset which was meant to have zero NBV or should have depreciated completely.
Please find below the details:
Year 2008
APC: 14,392.72
Ordinary deprec.: 2,878.54-
NBV:11514.18
Year 2009
APC: 14,392.72
Ordinary deprec.: 2,878.54-
NBV:8635.64
Year 2010
APC Fiscal Year start: 14,392.72
Ordinary deprec.: 2,878.54-
Acquisitin value change: 1352.00
APC Year end: (14,392.72 + 1352.00) = 15,744.72
NBV: (15,744.72 - (2878.54*3) = 7109.10
Year 2011
APC: (14,392.72 + 1352.00) = 15,744.72
Ordinary deprec.: (20% of 15,744.72) = 3148.94
NBV: (7109.10 - 3148.94) = 3960.16
Year 2012
APC: (14,392.72 + 1352.00) = 15,744.72
Ordinary deprec.: (20% of 15,744.72) = 3148.94
NBV:(3960.16 - 3148.94) = 811.22
Year 2013
APC: (14,392.72 + 1352.00) = 15,744.72
Ordinary deprec.: 811.22-
NBV:(811.22 - 811.22) = 0
Clients auditor wants to reverse the entry made in the year 2013 and depreciate the asset completely by 2012 itself.
Please help me to know what all are the adjusting entries to be made and what steps should I take to reverse the effect.
Thanks and regards,
Ashish Kumar