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How Do I Handle Additional Depreciation

A figure can be entered for Additional Depreciation on a fixed asset using a journal. This will not affect the existing automatic calculation of depreciation for the asset in the 12 months from the financial year start.

Except in the case that the Net Book Value of the asset would go below the residual value or 0 as a result of the additional depreciation. In this case an adjustment will be made to keep the Asset NBV at or above the residual value.

1. The additional depreciation will be applied to the NBV for calculation purposes from the start of the next financial year in the case of Reducing Balance Method.

2. For Straight Line Depreciation it will not be included in the calculation of the depreciation amount but will bring forward the point at which the asset reaches its residual value.


Change In Behaviour Is Outlined Below:

For reducing Balance method :-

The behaviour in Prime is such that in the year that depreciation is posted no further adjustment is made for the depreciation amount in the current year. So what you post is what you get.
The value is however included for the subsequent financial years calculations.

Straight line method is unaffected as there is no purchase price to depreciate.

Depreciation below 0 is never allowed so if additional depreciation would take the asset below 0 there will be an automatic  –ve depreciation figure shown at that point, (similarly for residual values).