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How to Correct a Depreciation Error

xAssets Fixed Asset Management User Guide
How To

How to Correct a Depreciation Error

This page explains how to correct a depreciation error, whether it is discovered before or after journals have been produced and posted. The approach differs depending on when the error is caught.

Before You Begin

  • Ensure you are in the Fixed Asset Management profile.
  • Identify the nature of the error: wrong depreciation type, incorrect recovery period, wrong purchase amount, missed disposal, etc.
  • Determine whether journals have already been produced and posted for the affected period.

Scenario 1: Error Found Before Journals Are Produced

If you discover an error after calculating depreciation but before producing journals, you can rewind and recalculate.

Step-by-Step Procedure

  1. Navigate to Financial > Asset Accounting > Period End Processing.
  2. Click the Rewind button. This will:
    • Delete all depreciation transactions for the current period.
    • Reset accumulated depreciation and net book values to their pre-calculation state.
    • Return the period to a "not yet calculated" state.
  3. Make the necessary corrections:
    • Wrong depreciation type: Navigate to the asset or category-book settings and change the depreciation type.
    • Incorrect recovery period: Edit the asset's depreciation setup and correct the recovery period.
    • Wrong purchase amount: Edit the asset's purchase transaction.
    • Missed disposal: Process the disposal now, before recalculating.
  4. Click the Calculate button to recalculate depreciation for the current period.
  5. Review the results again to confirm the correction is reflected.
  6. Produce journals once satisfied.

Important Notes on Rewind

  • Rewind only affects the current period. You cannot rewind a period that has already been advanced past.
  • Rewind does not undo journals. If journals have been produced but not yet posted to your GL, delete the journal files and rewind.

Scenario 2: Error Found After Journals Are Posted

If the error is in a past period (one that has already been closed and journals posted to your general ledger), you cannot simply rewind. The recommended approach is:

Step-by-Step Procedure

  1. Make the correction to the asset's depreciation setup (depreciation type, recovery period, etc.) so that future calculations are correct.
  2. Let the correction flow through as an adjustment in the current period. The next depreciation calculation will produce a charge based on the corrected setup, which may result in a catch-up or reduced charge that compensates for the prior error.
  3. Post an adjusting transaction if needed. Navigate to the asset's Transactions tab and add a manual transaction to adjust the accumulated depreciation or net book value:
    • Click Add at the bottom of the transaction list.
    • Select the appropriate book and transaction type.
    • Enter the adjusting amount and apply date.
    • Click Save.
  4. Post manual reversals in your general ledger for the incorrect journal entries from the past period. This must be done outside xAssets, in your accounting system.
  5. Document the correction for your auditors, including the original error, the adjusting entries, and the corrected figures.

When to Contact Your Administrator

Contact your system administrator if:

  • You need to reopen a closed period (this requires administrator privileges and auditor approval).
  • The error affects multiple assets and requires a bulk correction.
  • The error involves nominal code mismatches that require changes to the journal transformation.

Prevention

To reduce the risk of depreciation errors:

  • Review depreciation setup for new assets before running period-end calculations.
  • Use the Depreciation Setup Review query to check all assets before calculating.
  • Always review depreciation results before producing journals. See How to Review Depreciation Before Posting.