Dynamics NAV: User Defined Depreciation Methods in Fixed Assets
Microsoft Dynamics NAV (Navision) has several defined methods for calculating depreciation expense in Fixed Assets. These are Straight Line, Double Declining Balance, and a combination of the two where straight line depreciation is used when its results become the larger of the two methods calculated. But there are times when the desired method is something different. And that’s where Depreciation Tables come in.
Depreciation Tables allow the user to create various schemas to calculate depreciation. These can be based on either a pure percentage alone or using units as the basis of determining the appropriate depreciation expense. Below is the calculation of MACRS 5 Years with a half life. The rates are found on websites such as IRS.gov.
Also note that the Units column can be used to determine the appropriate depreciation expense. Simply enter the total number of units anticipated to be created by the asset in the General tab, and for each period enter the units produced in the Lines tab. NAV will calculate the percentage as the periods units produced divided by the total units to be produced as entered in the header.
Figure 1 – Depreciation Table Card
In addition, the Actions tab on the ribbon allows you to create a sum of digits calculation as shown below.
Figure 2 – Actions Tab
For this calculation, simply enter the number of years for the asset. NAV will then sum the years to determine the denominator for the calculation. Each year is then the value of the numerator in descending order. Therefore, year 1 will be 5/(1+2+3+4+5) = 1/3 or 33.33%.
Once you have created the depreciation calculation using either of the methods described, you need to tell NAV that is the method to be used in depreciation calculations. These are entered on the Lines tab of the Fixed Asset card.
Figure 3 – Fixed Asset Card
The Book TAX for the asset is stating that the depreciation method is User Defined. The Depreciation Table Code is MACRS5 YR, and the First Depreciation Starting Date is 1/1/2013. There is no need to enter the depreciation ending date or number of depreciation years. Those are determined by the periods in the depreciation tables.
As a matter of course, calculations of depreciation for books other than that which is posted to the General Ledger are run on an annual basis rather than monthly or quarterly. In addition, the first user-defined depreciation date is the first date of the tax year.
If you have a specific question or unique situation regarding depreciation calculations or any other Dynamics NAV costing topic, contact ArcherPoint (https://www.archerpoint.com/contact-us).
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