Category Archives: Reporting

Custom Annual Depreciation Report to Meet State Regulations

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Custom ReportsThere are standard fixed asset reports that are run on a monthly basis to track acquisitions, disposals and depreciation expense. Additionally, annual reports are necessary to meet normal year end requirements. But what do you do when a state or other entity requires a custom report?

Recently one of our clients faced just such a situation. The State of New York requires hospitals to submit an IRC (Institutional Cost Report) as detailed here:

http://www.health.ny.gov/facilities/hospital/rate_setting/

As part of this filing, they needed to recalculate depreciation using sum of the years’ digits method. In the past they have manually manipulated their fixed asset data to produce this report. This was very time consuming and caused a lot of questions and confusion.

This year they requested an integrated enhancement to our reporting to automatically generate the necessary report. After some analysis and design, we were able to meet their request with custom programming for a very reasonable fee. This custom annual depreciation report not only solves the problem for this year, but will also be available next year and going forward to avoid this annual headache.

As a best-of-breed fixed asset solution Bassets is very adept at meeting these special requests from our clients. If you have any reporting requirements that are difficult to comply with, bring the challenge to our support team. We are eager to evaluate any fixed asset or depreciation requests that you may have.

Questions or comments on this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Fixed Asset Continuity Schedule Report

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A continuity schedule report is a valuable instrument to view monthly asset activity.  It shows your opening balance at the start of the accounting period, monthly transactions and then the closing monthly numbers.  This report can be run for a single period, quarter, multiple periods or an entire calendar year. On this report the additions can be both new acquisitions as well as assets that have been transferred in. The disposals column represents disposals and also transferred out assets.

This report shows four columns for the depreciable basis and another four columns for accumulated depreciation over one of more accounting periods. Here are the columns of the report:

Depreciable Basis

  • Assets Opening Balance – cost of acquisitions from previous periods
  • Additions – new assets acquired during the reporting period(s)
  • Disposals – dispositions during the reporting period(s)
  • Assets Closing Balance – assets opening balance plus additions minus disposals

Accumulated Depreciation

  • Accum Dep Opening Balance – amount of depreciation calculated from the service date through the previous accounting period
  • Additions – amount of depreciation in the current accounting period or periods
  • Disposals – amount of any disposals
  • Accum Dep Closing Balance – opening balance

Continuity Schedule

In addition, this report includes columns for system asset number, asset description and net book value at the close of the selected accounting period. It is also common for this report to be sorted and grouped by general ledger code, asset class or branch within organization. A summary version is useful to view just the totals and suppress the asset detail.

This is very similar to a “roll forward” report and gives a nice snap shot of asset changes during the selected period(s). In an advanced continuity report, the additions and disposals columns are further separated to break out transfers into their own columns. Bassets eDepreciation features all three variations of this data in the form of a roll forward, continuity schedule and advanced continuity schedule reports to answer all activity inquiries.

Questions or comments on this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Five Year Projection Report for Forecasting Future Depreciation

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If you need to plan monthly depreciation for next year, then a twelve month view of your data is the best option. Here is a post we did last year on planning your monthly costs for next year:

http://www.depreciationguru.com/2012/09/how-to-plan-depreciation-costs-for-next-year/

If you need to plan further out into the future, then a five year projection is a better solution. A five year projection report is based upon the current accounting year and forward. As with the twelve month view that provides monthly depreciation, the five year projection report details annual depreciation and is used primarily for budgeting purposes. Below is a sample report:

Five Year Projection

The typical columns of this report include:

  • Unique asset identifier
  • Service Date
  • Depreciation Method
  • Estimated Life
  • Cost Basis
  • Accumulated Depreciation As Of the end of the current tax year
  • The current year plus 1
  • The current year plus 2
  • The current year plus 3
  • The current year plus 4
  • The current year plus 5
  • Total Depreciation – accumulated depreciation plus the annual depreciation for each of the five future years

This report can be run in a summary format by asset type, class or other grouping. Additionally you can generate a detail display for each individual asset. The five year projection report will estimate future depreciation based upon your existing assets. To add to the projections, budget assets can be established to account for anticipated purchases. You can then see the projected annual depreciation for each year with a cumulative total. The five year projection report is a valuable budgeting tool for both the tax and financial depreciation schedules.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Determining Nexus for State Depreciation Reporting

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Slide1This is the fifth and final in a series of posts that examine how to calculate depreciation at the state level while accounting for differences with the federal section 179 deduction and bonus depreciation rules. While a small number of states follow the federal depreciation code, the majority require adjustments for section 179 and bonus depreciation to state’s taxable income. Beginning in 2002 there have been several enhancements http://www.depreciationguru.com/category/bonus-depreciation/) to the tax code that allows increased Section 179 deductions and bonus depreciation on your company’s federal tax filing.

In the previous posts of this series, we have talked about the basic state reporting concept, manually calculating, automating the reporting process and the variances between different states. In this last post, we are going to examine the types of companies that need state depreciation reporting. This is not limited by type of industry, but determined by having a nexus or presence in the state.

To determine if your business has nexus in a state, you must check to see if you meet one of the following criteria:

  • Own or lease property or capital in the state
  • Employ personnel in the state
  • Derive income from sources within the state

These are just general guidelines for the basic nexus concept and it is important to research the rules for each state as the requirements can vary widely from state to state. In addition to the differences in nexus rules, many states also implement unique calculation instructions that must be followed to comply with state law.

Here is a handy link to BizFilings that details business income tax laws by state:

http://www.bizfilings.com/toolkit/sbg/tax-info/state-taxes/business-income.aspx

In a previous post we also provided links to the department of revenue for each state. So whether your company is a service organization that provides business services or law firm operating in multiple states you need to file the appropriate depreciation numbers. The same holds true in retail or restaurant chains and manufacturers with locations around the country.

Bassets eDepreciation’s state reporting option includes the selection of C Corp or Pass-Through (LLC, S Corp, Partners) to ensure correct calculations and compliance. The rules for different business entities can significantly impact the allowable deductions. It is critical to do your research for any state in which you do business and utilize software that will help you generate accurate reports each state filing.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

States that Do/Don’t Follow Federal Depreciation Regulations

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States that Do and Don'tThis is the fourth in a series of posts that examine how to calculate depreciation at the state level while accounting for differences with the federal section 179 deduction and bonus depreciation rules. Beginning in 2002 there have been several enhancements http://www.depreciationguru.com/category/bonus-depreciation/) to the tax code that allows increased Section 179 deductions and bonus depreciation on your company’s federal tax filing.

Many states calculate depreciation based on their own unique rules while others follow the federal regulations. Some states follow all the federal regulations and some follow most of the rules but disallow bonus depreciation. This can change from year to year so it is important to check the latest regulations.

Here is a link to the web site AccountingMajors.com that provides links to the department of revenue web site for all 50 states:

http://www.accountingmajors.com/accountingmajors/tax/

Although a small number of states made the decision to follow federal regulations with the bonus depreciation provision, the majority have chosen not to implement bonus depreciation.  If a state chooses to completely follow federal regulations then it is much easier for corporations to file tax returns because of the consistency in dealing with depreciation.

So why would a state make the decision to not follow the new legislature? The main reason is that they are concerned with the loss in tax revenue. That means states that choose to “decouple” from the federal law will retain the rules from prior law and require bonus depreciation to be added back on their return. While this is a solution to address the loss in state tax revenue, it creates a complexity for taxpayers that now have to deal two sets of rules. This can be difficult for both the state and the taxpayer in the current year as well as creating audit issues in future years.

If you do business in multiple states then you already know how complex this can get to keep up with the regulations in each state. To save time and produce an accurate return it is definitely worth looking at an automated solution like Bassets eDepreciation.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.