Automatic Tax Depreciation for Post-Capitalized Assets 

Use

If you want, the Property Tax Report automatically calculates the starting tax book values and tax evaluation amounts of any assets that you have post-capitalized in the past year (see example below). You can then adjust these values if necessary (see Changes to Last Year’s Tax Book Values and Evaluation Amounts).

Activities

Customizing

Activate the automatic tax depreciation function in Customizing for Financial Accounting (FI), by choosing Asset Accounting  ® Information System  ® Property Tax Repor t (Japan)   ® Make Settings for Property Tax Report .

Periodic Processing

When you execute the report, it calculates the post-capitalized assets’ tax book values and tax evaluation amounts for each year, starting from the assets’ depreciation start date. It thus arrives at the assets’ tax book value for the current property tax declaration.

The report also calculates any additional depreciation for the assets. However, the report does not calculate any additional depreciation for any years whose additional depreciation rates are missing.

If you need to adjust the values that the system determines, you can make a manual posting (see Changes to Last Year’s Book Values and Evaluation Amounts).

Example

On March 1, 2001, you purchase an asset that has an expected useful life of four years. The depreciation rate for tax purposes is 0.438 per year, starting on the asset’s acquisition date.

On April 1, 2003, you post a post-capitalization of JPY 5,600,000 to the asset, back-dated to the asset’s acquisition date. When you prepare the 2004 tax declaration, the Property Tax Report calculates the depreciation and tax book values for each year from March 1, 2001 on, to arrive at the depreciation and tax book value to be stated in the 2004 declaration:

Declaration	Depreciation	Tax Book Value
2002	2,044,000*	3,556,000
2003	1,557,528	1,998,472
2004	875,331	1,123,141

*Post-capitalization of JPY 5,600,000 posted on March 1, 2001; 10 months’ depreciation calculated.