Best Method - for revaluation in prior period

Good morning,

We have been recently acquired thus several thing are happening. One of which is a revalue of assets, backdated to October 1, 2020. What would be the best way to continue running depreciation in 2021, knowing that values of assets will change as of 10/1/2020?

My thought is to keep the current database running as version 2020.1 and making depreciation under this version. ((If we need to be under a 2021 version, we can duplicate the database of companies)). Once we receive the asset value changes as of 10/1/2020, import the changes and run depreciation to the current period to true it up. At this time, we would then upgrade to version 2021. We may not get the revalue until mid-February or even summer. it is unknown as of now.

Any bit of insight would be super helpful as this has been hit with high priority on coming up with the plan.

Thanks 

  • Hi, Nathan,

    For the time being, I recommend that you continue to manage your fixed assets in 2021 with the same routines you were following last year.

    However, you may start giving some thought as to how you will make the changes to your assets when you receive further guidance later this year from the new ownership and upper management.

    You wrote that you are currently expecting the acquisition values will be changed.  But you're not sure yet.  Moreover, if the values are changed, what will they be changed to?  Maybe, all assets will be re-priced to the NBV or some discounted calculation from the NBV.  But it appears no one can definitely say at this time.

    When you do finally receive some clarity on expectations, you might make changes to your assets in an Excel spreadsheet, and then later, create the assets from a custom import.  By the way, Nathan, we in Learning Services will be presenting a free one-hour webinar on how to export data into a spreadsheet in March.  It will be presented twice.  You might consider registering for one of those webinars when the dates are firmed up.  Watch the announcements on Sage City!

    Another option you might consider is to use the services of one of our Sage consultants from the Expert Services team.  They will create the assets for you with the changes that need to be made.  Contact your Sage account rep to pursue that way of implementing your changes.

  • Thinking more about your question, I want to add one more thing.  It seems you feel confident that the values are going to be as of 10/1/2020.

    A point of clarification, first.  Our fiscal periods are to the end of the month.  So, by Oct 1, you really mean 9/30/2020.

    So, you could set a period close on all of your assets as of 9/30/2020, and that will lock into your period close fields those calculated figures anchoring them to that moment in time.

  • Hi Bob,

    Yes - 9/30 end would be fine. The values of the assets could be changed to anything from NBV with a discount, to service lives being changes. I'm not certain what changes will be made or what the impact is, however want to ensure that we are not setting ourselves up for a difficult journey when it comes to making the changes from 2020, after starting into 2021. Flip side to that is we also need to continue calculating depreciation. 

    I've written a backup of 12/31/2020 reports for our companies so feel okay moving into 2021 with depreciation while using version 2020.1 (i'm assuming won't cause issues, but haven't tried). We can continue to get our depreciation expense and carry on like normal, with the understanding that when we get the revalue of all assets and want to bring the new values current, we will need to true up any changes to our financial statements. 

    I think it may be best to use our SAGE rep for the changes and can reach out to them. I just wanted the validation that starting 2021 will not back us into a corner for the value changes.

    (hopefully my rambling makes sense).

    Thanks!

  • Sounds like you may have already calculated depreciation to the end of 2020.  You will need to recalculate depreciation back to 9/30 before you can set the period close.  The period close must match the last time you depreciated.  Then, after you have set the period close, run the Depreciation Expense report and export the report to an Excel file.  In this way, you can capture those period close figures for possible reference if needed later.  After you  do this, you could then advance depreciation again to the end of the year.

    One advantage of having set the period close is that you have now given yourself the ability to reset depreciation back to the period close date.  Not sure you will need to do that, but at least you have that capability if necessary.