Setting up an Adjustment with Depreciation

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Table of Contents

Adding Assets with Depreciation

Adding the Asset

Adding the Depreciation

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.png 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.

Info.png 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:

  1. One line item for the asset itself.
  2. 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.png 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).

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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.

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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).

A10d.png

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.

A10e.png

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).

A9g.png

Step 4: Select the correct GL Accounts for Relief and Adjustment Decrease:

A9h.png

  • 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.

A9i.png

  • Adjustment Decrease GL Account – Select the asset GL Account you will credit (use to pay) for this asset (for example, a Cash account).

A10f.png

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.

A4d.png

Step 3: A Define Data Link popup appears. Select the Ellipsis icon ( Other.png ).

A4e.png

Step 5: A Link Source popup appears. Click + New Record Set Driver.

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Step 6: A Define Record Set Driver opens. Enter the following information in the fields provided:

A4g.png

  1. Name – Enter the name of the line item itself (“Depreciation for [name of asset]”).
  2. 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.
  3. Record Type – Click on this dropdown menu and select Adjustment. This selection changes the rest of the dropdown menus.
  4. Transaction – Leave this dropdown menu at its default (it should automatically switch to Adjustment when you choose the Record Type).
  5. 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).

Click Next.

A4h.png

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 >.

A4i.png

Step 8: Under Set Preview, select the Select icon ( Accept.png ) next to the name of the asset for which you are adding depreciation. Click Apply.

Info.png 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.

A4j.png

Step 9: The Define Data Link popup reappears. Click Apply.

A4k.png

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:

Info.png 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.

A9k.png

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.

A9l.png

Example of a completed Adjustment Input section for a depreciation line item:

A9m.png

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.

A7b.png

Now, the purchase of this asset and the asset’s depreciation is part of your budget.

 

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Comments

2 comments
  • Wow, that's it. Maybe you should write an entire manual on this process its so complicated. Am I reading this right that you want someone to follow every one of these steps for each and every asset item added to the budget over the year? How about if you decide that you are going to spend $20k a month on one asset item and you spread the $240k over the year. Can you apply the logic to the monthly purchases without going to each item or do we have to add each purchase individually and add a depn schedule per item?

    Is there a plan in place to simplify the process?
    Regards,
    Gino

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  • Hi Gino and thanks for your feedback. We have opened a Support ticket on your behalf to review your use case. Our team will be following up soon.

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