Why no depreciation in the month of purchase?

Hi Kevin,

Can I just check whether you have Auto Depreciation toggled on? If this is switched on then it will take it at the end of the month. Secondly, in Tools > Fixed Assets >Depreciation > Click on item > Edit > Insert a rate. All this should ensure it takes it at a regular, monthly rate.

If it is still causing you issues, please let me know.

Thanks Chris

Hi Kevin & Chris

I think Kevin is correct in that depreciation will commence from the month after that in which the asset is purchased, so an asset purchased 1 April will not start depreciating till May. More than anything this is a traditional thing in that most assets are bought mid month and people couldn't be bothered to calculate a half month first so they just started from month 2.

Obviously though, on the rare occasions you buy something on the 1st of the month this will, effectively, under depreciate the asset in year one. There are a couple of workarounds:

1. You could create your own April depreciation journal first then, when you set up the asset enter this sum in the accumulated depreciation box, the depreciation journal would then calculate it properly over the remaining life of the asset.

2. I came across this by chance when a client bought an assets but didn't start to use it for a couple of months so wanted to delay depreciation. On the asset screen there's a "purchase date" however you can think of it as "depreciation date" as it's this date that seems to determine when the depreciation begins. In your case therefore set this date to 31 March and put a note in the description box to say what you have done. This will create deprecation journals from 30 April.

I hope!

Hope that helps Paul

Hi Paul

I always calculate the partial month, probably too anal for my own good!

This one came about where various assets were introduced on 1/4 when making the switch from sole trader to LTD.

Thanks for the heads up on the two workarounds, I like to be proper so i'll likely use one.

Maybe something the tech team could consider though...

Hi Kevin

The trouble is that if you ask 100 people (or accountants!) how they want to treat depreciation, you'll end up with a complete mix of methods. Also CB have to consider that the majority of users have limited knowledge of this sort of function and so want to keep it as simple & uncluttered as possible.

As it happens CB's is probably the most user friendly I've come across and I try and get all my clients to use it as it saves a lot of time at the year end trying to work out where their fixed assets are and how to calculate the depreciation.

I'm happy to put up an idea for votes on this as, if nothing else, there's a need to clarify the role of the "date" field in that it can be different from the date entered when the asset was purchased.

Simplistically, as someone may want to delay depreciation, as well as starting it in the month of purchase, how about a purchase date and a "first month of depreciation" date?

For the reason given above, I'd not recommend a split month calculation, especially as, if you did, half the accountants would insist on Xdays/Ydays of the month and the other half Xdays/365, "anality" knows no bounds! So personal preference could still be used for the adjustment described above.

What do you think?

Cheers Paul

I agree...which as you quote rightly say rarely happens between accountants! :-)

I also like the idea of being able to state the first month of depreciation, so long as it doesn't clutter or confuse of course.

In all honesty, the workarounds you've already mentioned are likely to be enough, there's a very good chance i'll be the only user in the immediate future who pays it the slightest bit of notice anyway!!

Thanks Kevin

I think this is one of those tweaks that is worth a try, so I'll double check with support first that as they regularly have tickets on this sort of stuff that obviously never sees the light of the community.

Cheers Paul