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How to Review Depreciation Before Posting

xAssets Fixed Asset Management User Guide
How To

How to Review Depreciation Before Posting

This page explains how to review depreciation results after calculation but before producing journals. Reviewing results is a critical step -- once journals are exported and posted to your general ledger, correcting errors requires manual reversals in both systems.

Before You Begin

  • Ensure you are in the Fixed Asset Management profile.
  • Depreciation must have been calculated for the current period. If it has not, see How to Run Month-End Depreciation.

Step-by-Step Procedure

Step 1: Check the Total Depreciation

  1. Run the Depreciation in Current Period report.
  2. Check the total depreciation charge at the bottom of the report.
  3. Compare it to last month's total. The figure should be similar unless:
    • Significant new assets were added (total increases).
    • Assets were disposed of (total decreases).
    • Depreciation rules were changed.
    • Assets reached full depreciation (total decreases).

A sudden, unexplained change in the total is a red flag that warrants investigation.

Step 2: Check for Outliers

Sort the Depreciation in Current Period report by amount (descending) to identify unusually large or small charges:

Symptom Possible Cause Action
Very large charge on a single asset Incorrect recovery period (too short) Rewind, correct the recovery period, recalculate
Zero charge on an asset that should depreciate Missing or incorrect depreciation type Rewind, assign the correct type, recalculate
Negative depreciation Write-up or revaluation affecting the formula Investigate -- may be correct if a revaluation was intended
Charge on a disposed asset Disposal not processed before calculation Rewind, process the disposal, recalculate

Step 3: Verify New Assets

If assets were added during the period:

  1. Filter the depreciation report to show only the new assets.
  2. Verify each new asset depreciated at the expected rate.
  3. Check that the depreciation start date is correct -- assets should not depreciate before their purchase or in-service date.

Step 4: Review by Cost Centre

If your organisation tracks depreciation by cost centre:

  1. Run the Depreciation by Cost Centre report.
  2. Compare each cost centre's total to the prior month.
  3. Investigate cost centres with significant changes -- these may indicate transferred or reassigned assets.

Step 5: Reconcile

For formal reconciliation (especially at year-end), verify that:

  1. Opening NBV + Additions - Depreciation - Disposals = Closing NBV for each category or cost centre.
  2. Total depreciation in xAssets matches the total in the journal file.
  3. Journal entries balance -- debits equal credits.

Step 6: Proceed or Correct

  • If everything looks correct, proceed to produce journals.
  • If errors are found, click the Rewind button on the Period End Processing screen, make corrections, and recalculate. See How to Correct a Depreciation Error.