(FRA) Derogatory depreciation [AX 2012]
Updated: April 21, 2011
Applies To: Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack, Microsoft Dynamics AX 2012
Derogatory depreciation is an additional depreciation amount that is allowed for fixed assets by tax authorities in France. This extra amount is calculated from the difference between the tax value model and the accounting value model during the life of the fixed asset.
The calculated amount is the difference between the tax value depreciation amount and the accounting value model depreciation amount. If the amount is positive, the transaction type is Derogatory decrease. If the amount is negative, the transaction type is Derogatory increase.
For example, a EUR 1,000 fixed asset is depreciated in accounting for five years and in tax for three years. In this example, the accounting depreciation for the first year will be EUR 200 (1000/5), and the extra tax amount will be EUR 133.33 (1000/3 – 1000/5, or 333.33-200.00).
The accounting and tax books can use the same depreciation profile, or they can use different depreciation profiles. For example, the accounting book might use a straight line profile, whereas the tax book uses a reducing balance profile. For more information about depreciation profiles, see Set up depreciation profiles.
To use derogatory depreciation, the value models must meet the following requirements:
You cannot select the Allow negative net book value check box in the Value models form for both the accounting and tax value models.
You must select the same calendar for fixed assets in the Value models form for both the accounting and tax value models.
If the depreciation method for the depreciation profile is Reducing balance, you must select the Full depreciation check box for the tax value model in the Depreciation profiles form.
The depreciation profiles that are selected for both the accounting and tax value models must have the same depreciation year and period frequency.
The placed-in-service date for both the accounting and tax value models must be the same as soon as the value models are assigned to an asset.