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In Planning Maestro, you can analyze your company’s data and create budgets and forecasts for adjustments and expenses. After your Actuals (historical data) are uploaded into Planning Maestro, you can build your budgets in Planning Maestro.
One part of your budget is your Adjustments. You can use the Adjustments application to budget for several types of transactions, including assets you plan to purchase (such as office furniture, vehicles, or equipment) and their depreciation.
Example: A company plans to buy store interior furniture and fixtures for $120,000. The company records this value and its depreciation as line items in Adjustments.
Please Note: You do not need to record your company’s existing, already-purchased assets in this application. You can record existing assets’ depreciation as expenses in the Operating Expenses application.
This document shows you, a Planning Maestro user, how to set up an Adjustment for an asset you plan to purchase and its depreciation.
Adding Assets with Depreciation
To learn how to find the Adjustments application and set up a basic Adjustment, see Managing Adjustments.
To budget for an asset’s value and depreciation within the Adjustments application, use two separate line items:
- One line item for the asset itself.
- One line item for that asset’s depreciation.
Follow the steps below to add these line items and link them together.
Adding the Asset
First, add the asset itself as a line item in Adjustments. (For detailed instructions about adding an Adjustment, see Managing Adjustments.)
Enter the full value of the asset in the period you plan to purchase it, instead of in the Amount field. Then, you do not need a Spread Method, which can be misleading for an asset (because you don’t need to spread out the cost of an asset you already bought).
Example: The cost of this asset is entered in January 2022, when the company plans to purchase it, instead of the Amount field. It doesn’t need a Spread Method.
Setting up the Properties of the Asset
Open the Properties pane on the right and make sure this asset has the following properties. For a detailed explanation of all these property settings, see Managing Adjustments.
Asset Properties – Date
Make the Start Date for the asset the planned purchase date. This date should be in the same period in which you entered the dollar amount on the main working screen.
Asset Properties – Adjustment Input
Step 1: In the Adjustment Input section, click on Immediate next to Recognition Schedule and select the schedule you plan to use to pay for this asset. (Here, the Recognition Schedule acts as the Payment Schedule).
Step 2: At the bottom of the Adjustment Input section, click on Undesignated (Monetary) and select the statistical, monetary account to record this asset. This amount provides data for reporting, but does not affect your Profit and Loss Statement or Balance Sheet.
Asset Properties – Adjustment Properties
Step 1: In the Adjustment Properties section, leave the Adjustment Increase Debit/Credit as Debit (because an asset debits an asset account).
Step 2: In the Adjustment Properties section, if you want to run this asset purchase transaction through a Relief GL Account (intermediate account, such as an Accounts Payable account) click on the Enable Recognition Schedule toggle switch to turn it to the ON position.
Step 3: New fields appear below. Click on the dropdown menu next to Recognition Schedule and select the Recognition Schedule you want to use to determine how and when this transaction affects the Relief GL Account (for example, One Period (30 Days) if your payment policy is within 30 days).
Step 4: Select the correct GL Accounts for Relief and Adjustment Decrease:
- Relief GL Account – Select a Relief GL Account. A Relief GL Account is usually an intermediate or holding GL Account for the transaction before it reaches its final account – for example, Accounts Payable for a bill payment that eventually ends up in another liability account.
- Adjustment Decrease GL Account – Select the asset GL Account you will credit (use to pay) for this asset (for example, a Cash account).
Now, the purchase of this asset is part of your budget.
Adding the Depreciation
After adding the purchase of this asset to your budget, add this asset’s depreciation as a second line item.
Add a line item underneath the asset and name it Depreciation for [name of the asset].
- For the Account Number, use a depreciation GL Account (an expense account).
- Do not enter an amount yet.
Setting up the Properties for the Depreciation
Open the Properties pane for the Depreciation line item and select the following settings.
Depreciation Properties – Adjustment Input
Step 1: Click the Use Data Link toggle switch under Adjustment Input.
Step 2: Several fields disappear from the section. Next to Data Link, select Click to Edit.
Step 3: A Define Data Link popup appears. Select the Ellipsis icon ( ).
Step 5: A Link Source popup appears. Click + New Record Set Driver.
Step 6: A Define Record Set Driver opens. Enter the following information in the fields provided:
- Name – Enter the name of the line item itself (“Depreciation for [name of asset]”).
- Current Data Link Only – Click this toggle switch to turn it to the ON position. This step ensures that this Data Link is specific to this line item.
- Record Type – Click on this dropdown menu and select Adjustment. This selection changes the rest of the dropdown menus.
- Transaction – Leave this dropdown menu at its default (it should automatically switch to Adjustment when you choose the Record Type).
- Set Operation – Leave this dropdown menu at its default, Total (because you are only pulling in one line item, not a group of line items, and don’t need to calculate the average, maximum, or minimum).
Step 7: Under Define Record Set Driver, select the following options:
- Select based on – Select the Record Selections radio button.
- Version – Select the Version you are working in (which contains the asset line item).
- Account Number – Select Asset -- Asset (or the top level of your asset Account Group) to select all asset Account Numbers.
Click Add to Set >.
Step 8: Under Set Preview, select the Select icon ( ) next to the name of the asset for which you are adding depreciation. Click Apply.
Please Note: If more line items than just the asset appear on this screen, remove those extra line items first. To remove extra items, select each line item and click Remove Selected.
Step 9: The Define Data Link popup reappears. Click Apply.
Now, this depreciation line item is connected to the asset.
After setting up the Data Link, select the correct Recognition Schedule for this depreciation line item.
Step 1: If necessary, use the Recognition Schedules application, which is in the Automation module, to create a custom Recognition Schedule for depreciation.
Recognition Schedules application:
Please Note: A best practice is to name the custom Recognition Schedule “Depreciation – [extra information]” with “extra information” being the type of asset or length of the schedule. You can create several depreciation schedules here: for example, different schedules for vehicles, electronics, furniture, equipment, etc. that may be two years, five years, or ten years long.
Step 2: Return to the Adjustments application and re-open the depreciation line item and its Properties pane.
Step 3: In the Adjustment Input section, click on Immediate to select the correct depreciation schedule.
Step 3: Click on Undesignated (Monetary) to select a monetary, statisical GL Account for this depreciation line item. This amount provides data for reporting, but does not affect your Profit and Loss Statement or Balance Sheet.
Example of a completed Adjustment Input section for a depreciation line item:
Now, use the section below to set up the Adjustment Properties for this depreciation line item.
Depreciation Properties – Adjustment Properties
After you connect the depreciation line item to the asset, follow the steps below to make sure the rest of the Adjustment Properties are correct for depreciation:
- Set the Adjustment Increase Debit/Credit to Debit.
- (Optional) Select a Recognition Schedule and Relief GL Account (for line items that need to go through an intermediate account like Accounts Payable).
- Set the Adjustment Decrease GL Account to the correct accumulated depreciation account.
In the Adjustment Properties section:
Step 1: Click on the dropdown menu next to Adjustment Increase Debit/Credit and select Debit (because depreciation is an expense account and increases with a debit).
Step 2: Next to Adjustment Decrease GL Account, click on Undesignated (Asset) and select the accumulated depreciation account this line item credits.
Now, the purchase of this asset and the asset’s depreciation is part of your budget.