Depreciation/Amortization Calculated incorrectly for a fixed asset

Owned by Claire Aleman
02 03, 2023
2 min read

Issue/Symptom/Question

We set up a new fixed asset for period 12 of our fiscal year, when we ran Depreciation it calculated depreciation for six months when we only placed the asset into service for one month. Also it created Amortization instead of Depreciation.

Environment

PENTA for Windows

Setup of Fixed Asset Class account:

Fixed Asset Management > Setup > Classes > Classes > Master tab

Setup of Fixed Asset:

Fixed Asset Management > Asset Information

Depreciation Calculation:

Finance & Accounting > Processing > Fixed Assets > Depreciation Projection

Depreciation Adjustment Entry:

Fixed Asset Management > Depreciation Adjustment Entry

Resolution/Fix/Answer

Item #1- Depreciation calculated for six months instead of one:

  • PENTA calculates depreciation based on fiscal year, not calendar year.
  • Because the asset is set to calculate half-year depreciation, the first year the asset is placed into service will calculate half a year of depreciation.
    • If the asset is placed into service the last period of the current fiscal year, PENTA will calculate six months of depreciation.

Item #2 - Amortization was created instead of Depreciation:

PENTA uses the Depr Reserve Acct #: as one of the accounts to book entries when processing asset depreciation. If the account is set to Accumulated Amortization, then Amortization will be calculated. Review the accounts PENTA will post depreciation entries to in: Fixed Asset Management > Setup > Classes > Classes > Master tab.

To correct the asset record in PENTA, review the following steps:

  1. Process a Depreciation Adjustment Entry to back out the incorrect depreciation amount.
  2. Temporarily change the Asset Class for the Asset to a class within the Depreciation Expense Category of the fixed asset.
  3. Update the account number to the correct Depr. Reserve Acct # for the Asset class.
  4. Change the fixed asset Depreciation Method to be Straight Line, not ½ year.
  5. Change the Asset Class back to the original asset class for the fixed asset.
  6. Process Depreciation Projection for the month, and review the depreciation amount and the accounts posted by PENTA.
  7. If needed, process a depreciation adjustment entry to correct the depreciation calculated for the asset (if incorrectly calculated by PENTA).

If the above steps do not help you resolve your issue, please submit a Service Desk ticket and reference this Article. This will require Penta assistance, please provide the following:

  • Fixed Asset Id