About depreciation
The following depreciation methods are used in MYOB Assets Live:
(New Zealand) For Taxation purposes, depreciation is calculated on a monthly basis. For Accounting purposes, depreciation is calculated on a daily basis.
Prime Cost depreciation is calculated as a percentage of the original cost and reduces the asset value to zero. If a depreciation limit is applicable to an asset, the limit is applied in taxation depreciation calculations. For assets whose original cost has been offset by balancing charges, the adjusted original cost will be used in taxation depreciation.
This depreciation method is not applicable to New Zealand for taxation purposes.
Straight Line depreciation:
(Australia) Straight Line depreciation is similar to Prime Cost depreciation, but the value of the asset depreciates using Prime Cost calculations to the salvage value rather than zero. If a depreciation limit is applicable to the asset, the limit is applied in taxation depreciation calculations. For assets whose original cost has been offset by balancing charges, the adjusted original cost will be used in taxation depreciation.
(New Zealand) Straight Line depreciation depreciates an asset every year by the same amount, which is a percentage of its original cost price. This method is sometimes called the cost price basis. In other words, in this method depreciation is worked out on the purchase price of the asset and the same amount is claimed each year.
Diminishing Value depreciation is calculated on the asset’s opening written down value. If a depreciation limit is applicable, the asset’s opening written down value (for the purpose of calculating taxation depreciation) will equal the depreciation limit value less the accumulated depreciation.
Immediate Write Off depreciation is calculated as equal to the original cost of the asset. In essence, the asset is written off at the end of the current period or the financial year the depreciation starts.
(Australia) Units of Usage depreciation is calculated as a fraction of the current usage over maximum usage of the asset’s original cost.
(Australia) Replacement Cost depreciation is calculated as a percentage of the asset’s replacement cost.
What MYOB Assets Live does
- Calculates the depreciation for each asset using the appropriate depreciation method for taxation and accounting.
- records depreciation journals for each asset. Where the ledger is configured to post entries to a general ledger, depreciation journals are posted for each Asset Control Group.
The depreciation journal includes:
Debit depreciation expense account
Credit accumulated depreciation.
The private use depreciation journal includes:
Debit Private Use balance sheet account
Credit Private Use profit and loss account.
If the asset has private use, this amount is calculated using the private use percentage.
Depreciation is calculated when you...
add an asset
edit an asset
(Australia) allocate or de-allocate assets to small business or low value pools
sell an asset
reverse the sale of an asset
transfer an asset
make a balancing adjustment
add a new year.