Problem: What happens if I manually adjust the depreciation amount in the Month-End Closing document? Will future depreciation be recalculated or will the missing amount be restored?

Fixed asset depreciation is calculated automatically during the Month-End Closing procedure based on the depreciation parameters specified for the asset, including (acquisition cost, useful life, depreciation method, etc.).

During the Month-End Closing procedure, the system automatically creates the Fixed Asset Depreciation document. If required, the user can manually adjust the depreciation amount in this document for a specific accounting period.

For more information about fixed asset depreciation, refer to the following guide The Fixed Asset Depreciation documents.

Example

Initial data

• Asset cost: 20,000
• Useful life: 12 months
• Monthly depreciation: 1,666.67

System Logic

When the depreciation amount is manually changed for a specific month.

  1. The adjustment affects only that accounting period. The system does not automatically recalculate depreciation amounts for future periods.

In February, the user manually changes the depreciation amount in the Fixed Asset Depreciation document from the calculated amount of 1,666.67 AED to 2,000.00 AED. As a result, February depreciation is recorded as 2,000.00 AED instead of 1,666.67 AED.

In March, the system calculates depreciation during the Month-End Closing procedure based on the original fixed asset parameters, and the depreciation amount is 1,666.67.

• the manually adjusted amount is not restored or compensated in subsequent months;
• future depreciation continues to be calculated according to the asset's depreciation parameters, taking into account the updated accumulated depreciation and remaining book value

November and subsequent months

The system continues calculating depreciation using the standard calculation rules.

For example, if the user manually sets depreciation to 50% of the calculated amount in November, this adjustment applies only to November.

The system does not automatically restore the missing depreciation in December or any subsequent periods. Depreciation continues to be calculated according to the standard depreciation schedule, based on the updated asset balances after the manual adjustment.

Expected Result

Manual adjustments to depreciation:

• affect only the selected accounting period;
• do not trigger automatic recalculation of future depreciation;
• are not automatically reversed or compensated in subsequent Month-End Closing documents.

Note: Manual depreciation adjustments should only be performed when required by accounting policy or business requirements.