This article will provide an overview of how Depreciation is accounted for in Class, as well as explain the best way to set up Depreciation to benefit from the automation features available.
It provides links to all the relevant articles on the topic of Depreciation.
The topics that will be covered include:
- Top Tips on Depreciation Worksheets
- Depreciation Methods
- Depreciation Types & Treatments
- Depreciation Worksheet Set-Up Options
- Configuring Depreciation Worksheets
- Annual Depreciation Processing
- Depreciation FAQ
Top Tips on Depreciation Worksheets
In this video, you will learn 5 top tips to help you set up and manage Depreciation Worksheets in Class efficiently.
There are two options to track depreciation, the benefits of each are listed below:
- Depreciation Worksheet - (Recommended method)
- Automatically calculated CA and CWD each year once set up
- The Depreciation Worksheet can be easily rolled forward each year
- Fixed assets can be easily added/removed to the worksheet
- Simplifies the property disposal process and potential Captial Gain Tax calculation
- Manual Depreciation
- Doesn't require set up, useful if the property will only be held for a very short time period e.g. one year
You can only choose one method of calculating depreciation for each property.
Depreciation Types & Treatments
Below is a summary of the depreciation types available in Class and their impact on the various areas.
|Area||Capital Allowance (CA)||Capital Works Deductions (CWD)|
|Load Opening Balance Adjustments||First Element Adjustments (negative)||Tax-Deferred Adjustment (Positive)|
|Accounting Treatment||Depreciation Expense||N/A|
|Depreciation Method||Prime Cost / Diminishing Value||Prime Cost|
|Tax Treatment||Deductible Decline in Value||Deductible as Capital Works|
|Market Value Impact||Reduce Market Value by Amount of Depreciation (default)||No Impact|
Depreciation Worksheet Set-Up Options
There are two ways that a Depreciation Worksheet can be set-up in Class, the benefits of each are listed below:
- Combined and set up under a property - (Recommended method)
- Should be used where assets relate to the property
- Streamlines the disposal of the property (you won't need to record separate disposals or manually calculate CGT)
- Separate asset to the property e.g. Furniture & Fittings'
- Should only be used if the depreciable assets are unrelated to the property
If you want to change from Option 2 to use the recommended Option 1:
Review the instructions here where at least one period update has occurred and you can't roll back or here where a period update hasn't occurred and you can configure the Load Opening Balance screen
Configuring Depreciation Worksheets
There are two ways to configure the set up of a Depreciation Worksheet on Class:
- Import a Depreciation Worksheet from csv template
- Adding Assets to a Depreciation Worksheet
- If you have a Quantity Surveyor we recommend following this process to process this in bulk each year.
After the Depreciation Worksheet has been set up ensure that the residual in the Depreciation Worksheet always equals zero.
Annual Depreciation Processing
There are some processes that you may need to complete during the year in relation to Depreciation Worksheets including:
- Capitalising & Depreciating New Assets
- Fixed Asset disposal, if an asset is sold without the property
- Rollover Depreciation Worksheets Between Years
- Depreciation sale/disposal of property