Setting depreciation

You can configure depreciation rules by using Configuration Management. When you set up a depreciation schedule, and then need to adjust the cost and do a recalculation, the recalculation only takes affect from the current month forward. The system will not go back and recalculate from the beginning. For example, if a depreciation schedule starts on April 1, 2009, and you change the Actual Cost on August 11, 2009, and recalculate, the recalculation only takes affect from August 1, 2009. This is because the previous months are considered already depreciated.

Applicable CI types

Depreciation is provided only for the following CI types:

• Document
• Application
• Application Infrastructure
• Application System
• Computer System
• Mainframe
• Printer
• Software Server

Methods of depreciation

BMC Helix ITSM: Asset Management includes the following methods of depreciation:

The following table describes the depreciation methods:

Information needed to set depreciation

To understand depreciation of an asset, you must know the following information:

• Initial cost of the asset
• Useful life of an asset — How many years you expect the asset to retain value for your business
• Book value of an asset — The purchase cost minus the accumulated depreciation
• Depreciation — An expense that reduces the value of a long-term tangible asset
• Accelerated depreciation — A method of depreciation that enables greater deductions in the earlier years of the life of an asset
• Salvage value — The estimated value that an asset will realize at the end of its useful life

You can track the initial cost and the subsequent depreciation of your assets by using the Financials tab on the CI Information form.  

The following figure shows the Financials tab to configure depreciation: 

To set the depreciation schedule

1. Open a CI, as described inSearching for records in the application consoles.
2. Click the Financials tab.
3. Specify a Unit Price.
4. In the Accounting Information area, click Create.
   If depreciation has not yet been calculated, the Accounting Information area includes a Create button. After depreciation has been calculated, this area includes a View button.

5. In the Create CI Depreciation dialog box, for Method, select the depreciation method that you want to use for this CI.

   Depreciation method	CI valuation
   Straight Line Depreciation	Depreciates at a constant value per year
   Declining Balance (150%)	Depreciates at a constant rate per year, accelerated by a factor of 1.5 (150%)
   Double-Declining Balance (200%)	Depreciates at a constant rate per year, accelerated by a factor of 2.0 (200%)
   Sum of-the-year's Digits	Loses more of its value early in its lifetime

6. For Useful Life (months), specify the number of months that you expect this CI to be in service.
7. For Depreciation Starts, select the date when you want to start calculating depreciation for this CI.
   BMC Helix ITSM: Asset Management calculates depreciation on the last day of the month prior to the month you select, even if you select a specific date.
8. If this CI has a salvage value, specify it in the Salvage Value field and select a currency type from the list. 
   The salvage value is the estimated value that an asset will realize at the end of its useful life. BMC Helix ITSM: Asset Management uses the salvage value in calculating the monthly depreciation figures. For example, if a laptop costs $4,000.00 and has a useful life of 12 months and a salvage value of $1,000.00, BMC Helix ITSM: Asset Management uses $3,000.00 as the fully depreciated amount. The default amount for this field is $0.
9. Click Compute Depreciation. 
10. Click OK in any confirmation messages that appear. 
    The Depreciated field is now set to Yes, and the Create button is changed to View.
11. In the CI record, click Save.

To view depreciation

1. Open a CI, as described inSearching for records in the application consoles.
2. Click the Financials tab.
3. In the Accounting Information area, click View.
   If you see a Create button instead of a View button, depreciation has not yet been specified for this CI. 
   
4. To view the details of the depreciation history, select an item in the table, and click View.
5. After you finish viewing the information, in the Depreciation Details for CI dialog box, click Close.
6. To view the depreciation schedule for this CI, click the Depreciation Schedule tab.
   The tab shows the following information:
   • Effective Date — The date that the listed depreciation takes effect
   • Status — The status of the CI's depreciation
   • Current Depreciation — The amount of the listed depreciation
   • LTD Depreciation — The life-to-date depreciation
   • Useful Life of Asset — The estimated number of months that the depreciable asset is expected to be in use
   • Remaining Life — The number of months remaining in the useful life of the asset

To modify depreciation

1. Open a CI, as described inSearching for records in the application consoles.
2. Click the Financials tab.
3. In the Accounting Information area, click View. 
   If you see a Create button instead of a View button, depreciation has not yet been specified for this record.
   
4. Modify any of the following fields:
   • Method
   • Useful Life (months)
   • Depreciation Starts
   • Salvage Value 
5. To recalculate the depreciation for this CI record, click Recalculate.
6. In any confirmation messages that appear, Click Yes or OK.

7. In the CI record, click Save.

   Important

   • For charge-back entries for depreciation to work correctly, the same price must appear in the following fields: Unit Price field on the CI record form, Related Cost field on the Cost form, and the Total Purchase Cost field on the Depreciation form.
   • If you modify the Total Purchase Cost field on the Depreciation Details for CI dialog box and click Recalculate, a message indicates that you must manually update the Total Purchase Cost field on the Financials tab on the CI Information form.

To specify tax-related values other than depreciation

1. Open a CI, as described inSearching for records in the application consoles.
2. Click the Financials tab.

3. In the Accounting Information area, complete the following optional fields:

   Field name	Description
   Tax Credit	If you have donated this asset, specify the tax credit amount.
   Market Value	Specify the fair market value for this asset. This is the price at which an item can be sold by a willing seller to a willing buyer, neither of whom are under any pressure to buy or sell.
   Book Value	Specify the book value (subtracted from the accumulated depreciation from the purchase cost) for this asset.

4. In the CI record, click Save.