Where only one Period Update has occurred and this can be rolled back, a different set of instructions should be followed. This issue can be corrected in the opening balances by moving the depreciable assets to the property, refer to How to move depreciable assets into a property (first-year entity on Class).

Issue

Some entities have their depreciable assets set up as separate assets to the property. 

In the event that one or multiple Period Updates have been done and they are not able to be rolled back, the approach detailed below would need to be followed to consolidate a Depreciation Worksheet under a property.

The benefit of changing this is for reporting purposes to show the depreciation worksheet correctly and also to automate the CGT calc when it comes to disposing of the property.

Resolution

This article will explain the process to consolidate depreciable assets into the property so that when the property is disposed of, the CGT calculation for the disposal of the property can be automated.

Example

The Longreef  Super Fund purchased the Red Hill property 3 years ago, and initially, the Furniture and Fittings were set up as a separate asset to the property on Class. A depreciation worksheet was set up under Furniture and Fittings instead of under the property.

The following steps show you how to consolidate the Furniture and Fittings into the property so the depreciation worksheet can be correctly set up going forward.

1. Navigate to Browse Holding Accounts > click on the Furniture and Fittings > click Edit > scroll down and tick “Enable Editing of Reporting Categories” > change the “Capital Gain Classification” to Non CGT Asset.
2. Navigate to Transactions > Investment – Sell > Process a Property Sale Deposit for the Furniture and Fittings. Use 1 July as the date.
   

   For the amount, use the Opening Written Down Value for any asset that is depreciated under Div 40.  For any amount subject to capital works (Div 43) use the original purchase price, not the Opening Written Down Value.

3. Navigate to Transactions > Investment – Sell > Process a Property Sale Settlement for the Furniture and Fittings.
4. Navigate to Transactions > Investment – Buy > Process a Property Capital Improvement on the same date and for the same amount as the Property sale transaction.
5. Navigate to the Match Transactions tab and match off the 2 events relating to the property. Note that if you make the deposit event $0 then this will not show up in the Match Transactions screen
6. Navigate to Investments > Depreciation Worksheet > select the “Furniture and Fittings” tab > click export.
7. Open the exported csv file and change the property code (column B) to the code of the property. To find this code, look in the Browse Holding Accounts screen and look at the Holding Code column
8. Navigate to Investments > Depreciation Worksheet > select the “Red Hill Property” tab > click import.
9. Add any non depreciable assets if required (and if they have not been added previously)
10. Still in the Depreciation Worksheet navigate to the “Furniture and Fittings” tab and click “sell all”.
11. Run a period update to 30 June
12. Navigate to Reports, run a “Realised Capital Gains” report, and review the “Statement of Financial Position” report in the live reports section. You should see no capital gain or loss on the disposal of the Furniture and Fittings during the year and also that only the property appears in the balance sheet.