About capital transfers

The logic for the capital transfer processing

1. Equipment accounting transactions (J-EAT) for from-asset's unit. This will only be done when the From and To units are different. The system will create a J-EAT record to remove the capital amount from the from-unit. If accumulated depreciation to transfer is not zero, it will create a J-EAT record to remove the accumulated depreciation from the from-unit.
2. Equipment accounting transactions for the to-asset's unit. This will only be done when the From and To units are different. The system will create a J-EAT record to add the capital amount to the to-unit. If accumulated depreciation to transfer is not zero, it will create a J-EAT record to add the accumulated  depreciation to the to-unit.
3. Postable depreciation schedule for the from asset. The system will create a record in the asset depreciation schedule to remove the accumulated depreciation from the from-asset. It will create a record in Asset Depreciation Posting for the accumulated depreciation amount being removed. It will create records in the capital transaction schedule reference files for the capital and accumulated depreciation equipment accounting transactions for the from-asset. The capital transaction cross-reference file record will show that the amounts have been applied to the asset's postable schedule. It will call the program to automatically apply the change to the from-asset's depreciation schedule. Note that only the postable depreciation schedule will be updated.
4. Postable depreciation schedule for the to-asset. It will perform the same processing as step 3 for the to-asset.

Depreciation transaction date for accumulated depreciation entry

• Equipment capital transfers. The depreciation transaction date is set to the last posted date plus 1 day.
• Asset capital transfers. The depreciation transaction date is set to the effective date of the transfer. The user cannot use an effective date equal to the last posted transaction date.

Depreciation amounts after the capital transfer

The following comments apply when the System Depreciation Adjustment Option business parameter (or the Depreciation Schedule Adjustment Option in the schedule type) is set to 4 (Residual Fixed, No Entry).

The first Not Posted entry following the accumulated depreciation transfer is calculated as the Depreciation Amount * Number of Days Remaining in the Period / Number of Days in the Period. In other words, the first Depreciation Amount will always be pro-rated.

• Equipment Capital Transfers. The Depreciation Transaction Date for the Accumulated Depreciation transfer usually ends up as the 1st of the month following the last normal posted entry.
• • From Unit’s depreciation schedule. The Depreciation Amount for the normal month-end entry is calculated as Full month’s depreciation amount * (Number of days in month – 1) / Number of Days in month.
    E.g. If full month’s depreciation amount is 500.00, and capital transfer is done in December, the 12/31/08 depreciation amount = 500.00 * 30 / 31 = 483.87.
  • To Unit’s depreciation schedule. The adjustment of the to depreciation schedule is done using System Depreciation Adjustment Option = 5 (Amount Fixed, No Entry), regardless of the business parameter setting. The result is that the original depreciation amount from before the capital transfer is retained through the remaining Not Posted entries in the depreciation schedule.
• Asset Capital Transfer. The Depreciation Transaction Date for the transferred accumulated depreciation is set to the Effective Date of the transfer. The Depreciation Amount for the normal month-end entry is calculated as
  Full month’s depreciation amount * (Number of days in month – Day of Transfer) / Number of Days in month.
  E.g. If full month’s depreciation amount is 500.00, and capital transfer is done on December 9th, the 12/31/08 depreciation amount = 500.00 * (31 – 9) / 31 = 354.84.
  The from and to asset depreciation schedules are treated the same way.

Automatic Adjustment of Depreciation Schedules

The processing for application of capital adjustments to asset depreciation schedules is as follows.  The program will:

• Create the appropriate GL, AP, and/or AR transaction.
• Create an entry in J-EAT for each transaction detail line.
• Look up the Account Type for the transaction detail line’s GL Account from the account default tables.
• Check the business parameter for Use Asset Depreciation.
• • If Use Asset Depreciation is set to No, the program will continue to check the System Depreciation Adjustment Option business parameter. The current program for adjusting the unit depreciation schedule will be called if the System Depreciation Adjustment Option is set to one of the “automatic changes” values.
  • If Use Asset Depreciation is set to Yes, the program for automatic adjustment of asset depreciation schedules will be called. It does the following:
  • • Create a capital transaction cross-reference record. The Applied Status-Postable field will be set to Unapplied at this point. The Applied Status-Other field will also be set to Unapplied.
    • Look at the Asset to Unit Assignment file to find out how many assets are currently assigned to the unit.
    • Read through all of the depreciation schedule headers for the asset. For each schedule,
    • • Get the Depreciation Schedule Adjustment Option and Automatically Apply Capital Adjustments fields for the schedule type.
      • If the Depreciation Schedule Adjustment Option is NOT one of the “automatic change” values, nothing further will be done for this depreciation schedule.
      • If the Depreciation Schedule Adjustment Option is one of the “automatic change” values, the appropriate processing will be done. Appropriate processing is dictated by the Automatically Apply Capital Adjustments setting.
      • • Apply if 1:1 relation
          If there is only one asset currently assigned to the unit, the capital adjustment can be automatically applied to the current asset depreciation schedule. If there is more than one asset currently assigned to the unit, the system does not know which asset should receive the capital adjustment. In this case, it leaves the capital adjustment for manual application to a depreciation schedule.
        • Hold - manual application
          Always leave the capital adjustment for manual application to an asset depreciation schedule.
        • Do not apply
          Do not apply capital adjustment.
      • If the capital adjustment can be applied to an asset depreciation schedule, the following steps are done:
      • • Update capital amount on the schedule header to include the capital adjustment amount.
        • If the depreciation schedule is active or closed, the schedule details will be updated to reflect the capital adjustment amount. The way that the schedule is updated is dictated by the Depreciation Schedule Adjustment Option from the Schedule Type.
        • A Depreciation Schedule Adjustment Notice will be printed for each schedule that is updated.

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