Chart of Depreciation 
Chart of Depreciation
Definition
See
Chart of Depreciation.
Use
When you create a company code using the template for Mexico, the system assigns it chart of depreciation 1MX, which follows Mexican accounting requirements.
Structure
Chart of Depreciation
Depreciation area |
Use |
Currency |
01 |
Book depreciation (unadjusted) |
Local |
03 |
Inflation adjustments |
Local |
04 |
Book depreciation (adjusted) |
Local |
15 |
Tax depreciation |
Local |
16 |
Income tax adjustments |
Local |
18 |
Asset tax adjustments |
Local |
30 |
Consolidated book depreciation |
Local |
31 |
Consolidated book depreciation |
Group |
32 |
Book depreciation |
Group |
33 |
Book depreciation |
Hard |
34 |
Inflation adjustments |
Group |
35 |
Inflation adjustments |
Hard |
These depreciation areas cover different inflation and currency requirements, as follows:
Depreciation area 01 is used for recording depreciation before inflation adjustment. Area 04 is used for adjusted depreciation. Area 03 is used for the inflation adjustments only, that is, the difference between the unadjusted and adjusted values.
You buy a machine for MXN 1,000,000. In the first year it depreciates by MXN 100,000, giving a net book value of MXN 900,000. Inflation is running at 25%. The entries are as follows:
Area |
Acquisition cost (MXN) |
Depreciation (MXN) |
Net book value (MXN) |
01 |
1,000,000 |
100,000 |
900,000 |
03 |
250,000 |
25,000 |
225,000 |
04 |
1,250,000 |
125,000 |
1,125,000 |
The information in depreciation area 01 is duplicated in depreciation areas 32 and 33, with the difference that these areas are kept in your hard currency and group currency respectively. Whenever you post any changes in depreciation area 01, the system automatically updates areas 32 and 33.
Similarly, the system automatically maintains two copies of the depreciation area that you use to post inflation adjustments in your local currency (02): area 34 shows the adjustments in your group currency; area 35 in your hard currency. However, all adjustments in these areas will be zero, as inflation only affects the local currency.
You use areas 15, 16, and 18 for tax purposes.
See also:
Currency