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Use

There are certain tax laws (mid-quarter convention) in the United States that require you to calculate depreciation on the basis of half-periods. When the fiscal year version in the FI General Ledger corresponds to the calendar year (12 periods), you can meet this requirement without using a different fiscal year variant in Asset Accounting.

For more information, see Fiscal Years and Periods for Asset Accounting

Subsequent Changes to Period Control

It is sometimes necessary, according to American financial reporting requirements, to use the mid-quarter convention. This convention might require you to change the control of the start of depreciation in the last quarter of the fiscal year, for acquisitions in the current fiscal year.

( )  If you change period control from mid-year to mid-quarter, you have to change to all assets that were created with the old depreciation start date. This can be done individually or using mass change.

( )  The system helps you to comply with the mid-quarter convention by means of a standard report. For more information, see Preparations for Closing .

There are two ways of reflecting the requirements of the mid-quarter convention in the system:

  • Depreciation key with time-dependent period control

  • Depreciation key and sub-number per acquisition year

Depreciation key with time-dependent period control

Set the Period control according to fiscal years indicator in the Customizing definition of the depreciation key you want to use (   Depreciation   Valuation Methods   Period Control   Define Time-Dependent Period Controls   ). These keys then no longer use the period control of your depreciation key. Instead they use period controls that you specify, which are dependent on time and company code. You can define your own specific period controls for these depreciation keys

  • Per company code

  • Per fiscal year and

  • Per transaction type category

  • Change the time-dependent period control in these depreciation keys (in the application menu:   Environment   Current Settings   ).

  • Start the program for the re-calculation of depreciation for the affected company codes.

( )  Note that the system uses an across-the-board treatment for retirements of the following years when you use this method. This means that the system does not check whether the asset acquisition was in a year that used the mid-quarter convention or in a year with normal period control. Regardless, the system always uses the period control entered in the depreciation key for the retirement.

Depreciation key and sub-number per acquisition year

In order to avoid this across-the-board treatment, you can define a special mid-quarter depreciation key, and then work with asses numbers per acquisition year. Make the following settings:

  • Define a special mid-quarter depreciation key. Set the following:

  • In the depreciation key, set the Acquisition only in the capitalization year indicator. This ensures that the acquisitions in following years have to be managed on asset sub-numbers. As a result, the information about whether the acquisition year is a year with mid-quarter depreciation is not lost.

  • In the depreciation key (or in the period methods assigned to it), set period control for acquisitions and retirements at mid-quarter.

  • Manage a separate sub-number for each acquisition year.

  • Enter this special depreciation key in the asset main numbers and asset sub-numbers that were acquired in this year. You can use a mass change to enter this depreciation key.