Hello,
During a financial roll-out for Latvia, we are faced with an issue regarding the tax depreciation.
The business/legal requirements are as follows: for tax purpose, an asset benefits from a decline balance depreciation at a constant rate, 70% for instance, until the net tax value reaches below 71 euros, in case of which, the asset should be fully depreciated by the end of current year.
Example:
An asset purchased at 1000 by year end 2014
| Date | Depreicaiton | Net book value |
|---|---|---|
| 31/12/2014 | 1000 | |
| 31/12/2015 | 700 | 300 |
| 31/12/2016 | 210 | 90 |
| 31/12/2017 | 90 | 0 |
Depreciation for year N+2 is 90 €(full depreciation) because the decline method would have led to a net value of 27€, which is below 71 euros.
There are 2 problems:
- The setting in OAYJ does trigger a changeover method when the asset goes below 71 euros, however, by standard logic, the full depreciation takes place always for the following year not the current year. For the above example, the asset value goes to 0 by year end 2018 not 2017.
- The business has no idea what the tax useful life to be maintained in asset master because it is calculated by the tax depreciation. However, the standard SAP does not seem to support a dummy tax useful life.
Can anyone help ?
Thanks !