Chart of Depreciation 
Chart of Depreciation
Definition
See
Chart of Depreciation.
Use
When you create a company code using the template for Peru, the system assigns it chart of depreciation 1PE, which follows Peruvian accounting requirements.
Structure
Chart of Depreciation
Depreciation area |
Use |
Currency |
01 |
Book depreciation (unadjusted) |
Local |
02 |
Inflation adjustments |
Local |
03 |
Book depreciation (adjusted) |
Local |
05 |
Tax depreciation (unadjusted) |
Local |
06 |
Tax depreciation adjustments |
Local |
07 |
Tax depreciation (adjusted) |
Local |
08 |
Controlling depreciation (unadjusted) |
Local |
09 |
Controlling depreciation adjustments |
Local |
10 |
Controlling depreciation (adjusted) |
Local |
50 |
Book depreciation (unadjusted) |
Hard |
51 |
Book depreciation adjustments |
Hard |
60 |
Tax depreciation (unadjusted) |
Hard |
61 |
Tax depreciation adjustments |
Hard |
70 |
Controlling depreciation (unadjusted) |
Hard |
71 |
Controlling depreciation 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 03 is used for adjusted depreciation. Area 02 is used for the inflation adjustments only, that is, the difference between the unadjusted and adjusted values.
You buy a machine for PEN 1,000,000. In the first year it depreciates by PEN 100,000, giving a net book value of PEN 900,000. Inflation is running at 5%. The entries are as follows:
Area |
Acquisition cost (PEN) |
Depreciation (PEN) |
Net book value (PEN) |
01 |
1,000,000 |
100,000 |
900,000 |
02 |
50,000 |
5,000 |
45,000 |
03 |
1,050,000 |
105,000 |
945,000 |
Depreciation for tax purposes is recorded in areas 05, 06, and 07, which contain the unadjusted net book values, inflation adjustments, and adjusted net book respectively.
The same applies to depreciation for controlling purposes, which is recorded in areas 08, 09, and 10.
The information in depreciation areas 01, 05, and 08 (book, tax, and controlling depreciation) is duplicated in depreciation areas 50, 60, and 70 respectively, with the difference that these areas are kept in your hard currency. Whenever you post any changes in depreciation areas 01, 05, or 08, the system automatically updates area 50, 60, or 70.
Similarly, the system automatically maintains copies of the depreciation areas that you use to post inflation adjustments in your local currency (02, 06, and 09). However, all adjustments in these areas will be zero, as inflation only affects the local currency.
See also:
Currency