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Fixed Asset - Impairment

  • 1.  Fixed Asset - Impairment

    Posted 07-09-2018 10:32 AM
    How do you record impairment of a fixed asset in the Fixed Asset Module?  I want to reduce the cost of the asset and record the loss.  I also want to reduce the useful life of the asset from what was originally set up.

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    Courtney Murray
    Manager, Strategic Planning and Budget Development
    Public Employees Benefits Agency
    gina
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  • 2.  RE: Fixed Asset - Impairment

    Posted 07-10-2018 08:50 AM
    You would go into the card for the asset (the Book) and update the depreciation sensitive fields in order to adjust the future depreciation.  So you'd update the cost and then update the remaining life years/days.  You'll get prompted to recalculate Life/year/no recalculation.  If you want the change just going forward, you wouldn't recalculate any past depreciation.

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    Kimberly Lomax
    Manager, Financial Systems
    Rayonier
    Jacksonville FL
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  • 3.  RE: Fixed Asset - Impairment

    GPUG ALL STAR
    Posted 07-10-2018 08:59 AM
    The best way I've found for dealing with impairments is to process a partial retirement and create a retirement code for impairments.

    I've got more details here: http://mpolino.com/gp/weekly-reviewfixed-asset-impairment/


    When it comes to reducing the life, you should be able to change the life on the asset book card and then answer how you want to deal with the change. The options that will pop up are Reset Life, Reset Year, and Recalculate.

    Reset Life will recalculate the depreciation on the asset life to date and make a catch-up adjustment for the change. Reset Year will only recalculate the depreciation for the current year and make a catch-up adjustment based on the change to this year. Recalculate will take remaining amount and
    recalculate it over the remaining life. There's more nitty gritty stuff you probably don't need on these options at http://mpolino.com/gp/weekly-dynamic-what-really-happens-with-fa-recalculate/.

    I would lean toward doing the impairment retirement first and then change the life, mainly because I think it's cleaner to explain.

    Mark


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    Mark Polino
    Director of Client Services
    Fastpath
    Altamonte Springs FL
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  • 4.  RE: Fixed Asset - Impairment

    Posted 07-10-2018 10:14 AM
    I had previously tried doing a partial retirement in our test environment.  However, when I retire say 40% of the asset it also wants to back out 40% of the accumulated amortization.  Is there a way to do this without impacting the accumulated amortization?  I.e. reduce the cost of the asset and record the loss for the same amount.

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    Courtney Murray
    Manager, Strategic Planning and Budget Development
    Public Employees Benefits Agency
    gina
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  • 5.  RE: Fixed Asset - Impairment

    GPUG ALL STAR
    Posted 07-11-2018 03:50 PM
    If you do an impairment without adjusting the amortization you're going to end up amortizing more than the value of the asset. (I know that there are scenarios with negative depreciation/amortization, but this isn't one).

    GP won't keep calculating the amortization at the original value if the value has been changed. When I ran this through there was also a reduction in the asset and an entry for the loss.

    Another option might be to reduce the value of the asset in both the asset card (it's an expansion button and you add a line item for the impairment) and the asset book card. It's still going to make you recalculate the amortization because the asset value has changed.

    The last option I can think of is to use an offset account and do a journal entry. Credit something like impaired asset or accrued impairment and debit the loss. Then when the asset is finally disposed of, clear that against impairment account. That's at least cleaner than hitting the GL for the asset and screwing FA recon. I'm just not convinced your accounting is going to be right.

    Mark

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    Mark Polino
    Director of Client Services
    Fastpath
    Altamonte Springs FL
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