Description:
There are few assets in a category. Out of these assets, category and rate of one asset is to be changed with prospective effect.
Is it possible in FAMS? If not, then any workaround.

Solution
If rate is to be changed for ALL the assets in the category, it is provided in FAMS. However there is no direct method of changing the category and rate of partial assets.

Workaround
Prospective change of category and rate is possible via the following work-around

• First change the Category for the asset thru Transactions -> Change of Asset Category. This will not change the rate, and continue to calculate depreciation by old rate tagged to previous category
• Next, manually change the “over Ride” rate for the asset in Transactions-> Acquisition of asset

Precautions

• Asset ID will remain same. An asset belonging to Computer category – now shifted to Furniture. Asset ID will remain what was given originally for Computer category.
• Depreciation needs to be calculated upto that date to give effect of new rate. Example : New rate applicable from 15/07/2009. Depreciation needs to be calculated till 14/07/2009

Description:
There are some assets having 100% depreciation rate. Depreciation is calculated every month.
We would like depreciation to be calculated proportionately in such a way that it gets depreciated over 365 days from date put-to-use.
Is it possible in FAMS and how ?

Solution
It is possible to depreciate an asset with 100% rate over 365 days from date put to use. There is an option provided in Master->Parameters

1. Proportionate Dep Calc for 100% rate
2. Full write-off for 100% rate in Financial Year

Example:
An asset is purchased as per details in Table below

A Proportionate Dep Calc for 100% rate
In this option the asset will get depreciated over 365 days i.e. from August 2002 to July 2003. Depreciation calculation for the two financial years given blow.
Depreciation is calculated as
Depreciation Amt = Cost x Rate / 100 x No of days / 365

Financial Year : 2002-2003

B Full write-off for 100% rate in Financial Year
In this option the asset will get depreciated till the financial year end i.e. from August 2002 to March 2003. Depreciation is calculated as
Total No of Days = Last Date of Depreciation - Date put to use + 1
DepAmt = Cost x Rate / 100 x No of days / Total No of Days

Financial Year : 2002-2003

Description:
As per Accounting Standard 6, “Any addition or extension to an existing asset which is of a capital nature and which becomes an integral part of the existing asset is depreciated over the remaining useful life of that asset.”As a practical measure, however, depreciation is sometimes provided on such addition or extension at the rate which is applied to an existing asset.
How is this to be implemented in FAMS ?

Solution
FAMS has provided an option to update addition to an existing asset as ‘Dependent-Child’. Depreciation on such dependent child can also be parameterized to take care of accounting standards.

Updating dependent child

• In Transaction->Acquisition screen, field Acquired As has drop-down value "Dependent-child". For this the parent asset needs to be selected
• Once the asset is added as Depe AssetID, if assets is acquired as ‘Dependent-Child’, cost of this asset is added to the cost of parent asset . Dependent child does not get any separate asset ID and no separate identity is maintained thereafter.

Depreciation Calculation
Depreciation calculation for the dependent child can be handled in the one of the three ways provided in Parameters

1. Based on Date put to use of parent asset
2. Based on Date put to use of dependent child
3. Cost of dependent child to be writen-off alongwith parent asset

A Based on Date put to use of parent asset

• In this case date put to use of dependent child is ignored and that of parent child is considered
• As can be seen from table below, although dependent child is used only for 183 days, depreciation on the same has been calculated for 365 days

• In this case, a new rate of depreciation is worked out in such a way that the cost of parent asset and dependent child gets depreciated over remaining life of parent asset
• This new rate is automatically updated as 'Over Ride' rate in acquisition of asset and depreciation is calculated based on this over-riding rate
• In the table below, this point is explained.