[jira] Created: (OFBIZ-1586) Implement more fixed asset depreciation (methods)

[Nicolas Malin (Jira)]

Implement more fixed asset depreciation (methods)
--------------------------------------------------

                 Key: OFBIZ-1586
                 URL: https://issues.apache.org/jira/browse/OFBIZ-1586
             Project: OFBiz
          Issue Type: Improvement
          Components: accounting
    Affects Versions: SVN trunk
            Reporter: Santosh Malviya
            Priority: Minor
             Fix For: SVN trunk


There are more 'depreciation methods' which  are :-
(1) Activity Depreciation :- Activity depreciation methods are not based on time, but on a level of activity. This could be miles driven for a vehicle, or a cycle count for a machine. When the asset is acquired, we estimate its life in terms of this level of activity. Assume the vehicle above is estimated to go 50,000 miles in its lifetime. We calculate a per-mile depreciation rate: ($17,000 cost - $2,000 salvage) / 50,000 miles = $0.30 per mile. Each year, we then calculate the depreciation expense by multiplying the rate by the actual activity level.
Formula -  
depreciation = (purchase cost - salvage value) * (current reading - previous reading) / expected life in distance unit
where
distance unit may be miles, kilometers, etc....
and current reading and previous reading are reading of the distance meter or distance count meter.

(2) Unit of Production Depreciation :- Units of production depreciation is used for assets for which it is better to measure the life in terms of the quantity of the resource you expect to extract from them, such as mines or wells. For example, the production capacity of an oil well is the number of barrels of oil you expect to extract from it. For machinery or equipment, you measure the production capacity in terms of the expected total hours of use.
You can enter the production capacity as the expected total production or expected total use. First, you enter the units of production depreciation method, production capacity, and unit of measure. You then enter the production each period to depreciate the asset according to actual use that period.

Formula -  
depreciation = (purchase cost - salvage value) * (Production for the Period ) / expected production capacity
where
Production for the Period = current production count - previous production count

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[Nicolas Malin (Jira)]

    [ https://issues.apache.org/jira/browse/OFBIZ-1586?page=com.atlassian.jira.plugin.system.issuetabpanels:comment-tabpanel&focusedCommentId=12560943#action_12560943 ]

Sumit Pandit commented on OFBIZ-1586:
-------------------------------------

For this I would like to suggest to add two fields in the entity FixedAsset which make field expectedLifeOfFixesAsset more generic in sense of calculate all depreciation algorithms.
The fields can be :-
1) expectedUsageLife which takes a long value to determine the life of asset
2) expectedUsageLifeUomId which is uom in which the life of asset is measured.It include uomTypeId = TIME_FREQ_MEASURE, LENGTH_MEASURE, QUANTITY.

using these two fields we can represent the expected life of vehicle in terms of miles or life of machine in terms of unit of production, life of equipment in terms of years and so on.....

Note : There is an existing field "expectedEndOfLife" is of type java.sql.Date, DATE  we can replace it with  expectedUsageLife or we can change the data type of expectedEndOfLife.

Let us see the thoughts of Jacopo Cappellato and other people on it.

> Implement more fixed asset depreciation (methods)
> --------------------------------------------------
>
>                 Key: OFBIZ-1586
>                 URL: https://issues.apache.org/jira/browse/OFBIZ-1586
>             Project: OFBiz
>          Issue Type: Improvement
>          Components: accounting
>    Affects Versions: SVN trunk
>            Reporter: Santosh Malviya
>            Priority: Minor
>             Fix For: SVN trunk
>
>
> There are more 'depreciation methods' which  are :-
> (1) Activity Depreciation :- Activity depreciation methods are not based on time, but on a level of activity. This could be miles driven for a vehicle, or a cycle count for a machine. When the asset is acquired, we estimate its life in terms of this level of activity. Assume the vehicle above is estimated to go 50,000 miles in its lifetime. We calculate a per-mile depreciation rate: ($17,000 cost - $2,000 salvage) / 50,000 miles = $0.30 per mile. Each year, we then calculate the depreciation expense by multiplying the rate by the actual activity level.
> Formula -  
> depreciation = (purchase cost - salvage value) * (current reading - previous reading) / expected life in distance unit
> where
> distance unit may be miles, kilometers, etc....
> and current reading and previous reading are reading of the distance meter or distance count meter.
> (2) Unit of Production Depreciation :- Units of production depreciation is used for assets for which it is better to measure the life in terms of the quantity of the resource you expect to extract from them, such as mines or wells. For example, the production capacity of an oil well is the number of barrels of oil you expect to extract from it. For machinery or equipment, you measure the production capacity in terms of the expected total hours of use.
> You can enter the production capacity as the expected total production or expected total use. First, you enter the units of production depreciation method, production capacity, and unit of measure. You then enter the production each period to depreciate the asset according to actual use that period.
> Formula -  
> depreciation = (purchase cost - salvage value) * (Production for the Period ) / expected production capacity
> where
> Production for the Period = current production count - previous production count

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[Nicolas Malin (Jira)]

     [ https://issues.apache.org/jira/browse/OFBIZ-1586?page=com.atlassian.jira.plugin.system.issuetabpanels:all-tabpanel ]

Santosh Malviya updated OFBIZ-1586:
-----------------------------------

    Attachment: ActivityDepreciation.patch

For Activity depreciation method partially implemented patch is attached  and following are steps to calculate depreciation : -
(1) Create a new fixed asset or update the existing one with following parameters :-
    a) Fixed asset id (if creating a new fixed asset)
    b) Date acquired *
    c) Expected End Of Life *
    d) Salvage Value
    e) Purchase Cost *
    f) Purchase Cost Uom Id
    g) Expected Usage Life *
    h) Expected Usage Life Uom Id (depending upon the type of fixed asset)
(2) Then go to the " Maintenance" tab and create a new maintenance with following parameters : -
     a) Status  
      b)Interval Quantity
      c) Interval Uom
      d) Interval Meter Type
   Then go to "Meter Readings" and add meter reading to the fixed asset.

(3) Then go to "Assignments" tab and then to the "Depreciation method  assignments" and choose Activity depreciation method and add to the fixed asset.

(4) Then press the  "Depreciation " tab and you will get the depreciation calculated for the fixed asset.

* indicates required field.

> Implement more fixed asset depreciation (methods)
> --------------------------------------------------
>
>                 Key: OFBIZ-1586
>                 URL: https://issues.apache.org/jira/browse/OFBIZ-1586
>             Project: OFBiz
>          Issue Type: Improvement
>          Components: accounting
>    Affects Versions: SVN trunk
>            Reporter: Santosh Malviya
>            Priority: Minor
>             Fix For: SVN trunk
>
>         Attachments: ActivityDepreciation.patch
>
>
> There are more 'depreciation methods' which  are :-
> (1) Activity Depreciation :- Activity depreciation methods are not based on time, but on a level of activity. This could be miles driven for a vehicle, or a cycle count for a machine. When the asset is acquired, we estimate its life in terms of this level of activity. Assume the vehicle above is estimated to go 50,000 miles in its lifetime. We calculate a per-mile depreciation rate: ($17,000 cost - $2,000 salvage) / 50,000 miles = $0.30 per mile. Each year, we then calculate the depreciation expense by multiplying the rate by the actual activity level.
> Formula -  
> depreciation = (purchase cost - salvage value) * (current reading - previous reading) / expected life in distance unit
> where
> distance unit may be miles, kilometers, etc....
> and current reading and previous reading are reading of the distance meter or distance count meter.
> (2) Unit of Production Depreciation :- Units of production depreciation is used for assets for which it is better to measure the life in terms of the quantity of the resource you expect to extract from them, such as mines or wells. For example, the production capacity of an oil well is the number of barrels of oil you expect to extract from it. For machinery or equipment, you measure the production capacity in terms of the expected total hours of use.
> You can enter the production capacity as the expected total production or expected total use. First, you enter the units of production depreciation method, production capacity, and unit of measure. You then enter the production each period to depreciate the asset according to actual use that period.
> Formula -  
> depreciation = (purchase cost - salvage value) * (Production for the Period ) / expected production capacity
> where
> Production for the Period = current production count - previous production count

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[Nicolas Malin (Jira)]

     [ https://issues.apache.org/jira/browse/OFBIZ-1586?page=com.atlassian.jira.plugin.system.issuetabpanels:all-tabpanel ]

Santosh Malviya updated OFBIZ-1586:
-----------------------------------

    Comment: was deleted

> Implement more fixed asset depreciation (methods)
> --------------------------------------------------
>
>                 Key: OFBIZ-1586
>                 URL: https://issues.apache.org/jira/browse/OFBIZ-1586
>             Project: OFBiz
>          Issue Type: Improvement
>          Components: accounting
>    Affects Versions: SVN trunk
>            Reporter: Santosh Malviya
>            Priority: Minor
>             Fix For: SVN trunk
>
>         Attachments: ActivityDepreciation.patch
>
>
> There are more 'depreciation methods' which  are :-
> (1) Activity Depreciation :- Activity depreciation methods are not based on time, but on a level of activity. This could be miles driven for a vehicle, or a cycle count for a machine. When the asset is acquired, we estimate its life in terms of this level of activity. Assume the vehicle above is estimated to go 50,000 miles in its lifetime. We calculate a per-mile depreciation rate: ($17,000 cost - $2,000 salvage) / 50,000 miles = $0.30 per mile. Each year, we then calculate the depreciation expense by multiplying the rate by the actual activity level.
> Formula -  
> depreciation = (purchase cost - salvage value) * (current reading - previous reading) / expected life in distance unit
> where
> distance unit may be miles, kilometers, etc....
> and current reading and previous reading are reading of the distance meter or distance count meter.
> (2) Unit of Production Depreciation :- Units of production depreciation is used for assets for which it is better to measure the life in terms of the quantity of the resource you expect to extract from them, such as mines or wells. For example, the production capacity of an oil well is the number of barrels of oil you expect to extract from it. For machinery or equipment, you measure the production capacity in terms of the expected total hours of use.
> You can enter the production capacity as the expected total production or expected total use. First, you enter the units of production depreciation method, production capacity, and unit of measure. You then enter the production each period to depreciate the asset according to actual use that period.
> Formula -  
> depreciation = (purchase cost - salvage value) * (Production for the Period ) / expected production capacity
> where
> Production for the Period = current production count - previous production count

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[Nicolas Malin (Jira)]

     [ https://issues.apache.org/jira/browse/OFBIZ-1586?page=com.atlassian.jira.plugin.system.issuetabpanels:all-tabpanel ]

Santosh Malviya updated OFBIZ-1586:
-----------------------------------

    Attachment:     (was: ActivityDepreciation.patch)

> Implement more fixed asset depreciation (methods)
> --------------------------------------------------
>
>                 Key: OFBIZ-1586
>                 URL: https://issues.apache.org/jira/browse/OFBIZ-1586
>             Project: OFBiz
>          Issue Type: Improvement
>          Components: accounting
>    Affects Versions: SVN trunk
>            Reporter: Santosh Malviya
>            Priority: Minor
>             Fix For: SVN trunk
>
>
> There are more 'depreciation methods' which  are :-
> (1) Activity Depreciation :- Activity depreciation methods are not based on time, but on a level of activity. This could be miles driven for a vehicle, or a cycle count for a machine. When the asset is acquired, we estimate its life in terms of this level of activity. Assume the vehicle above is estimated to go 50,000 miles in its lifetime. We calculate a per-mile depreciation rate: ($17,000 cost - $2,000 salvage) / 50,000 miles = $0.30 per mile. Each year, we then calculate the depreciation expense by multiplying the rate by the actual activity level.
> Formula -  
> depreciation = (purchase cost - salvage value) * (current reading - previous reading) / expected life in distance unit
> where
> distance unit may be miles, kilometers, etc....
> and current reading and previous reading are reading of the distance meter or distance count meter.
> (2) Unit of Production Depreciation :- Units of production depreciation is used for assets for which it is better to measure the life in terms of the quantity of the resource you expect to extract from them, such as mines or wells. For example, the production capacity of an oil well is the number of barrels of oil you expect to extract from it. For machinery or equipment, you measure the production capacity in terms of the expected total hours of use.
> You can enter the production capacity as the expected total production or expected total use. First, you enter the units of production depreciation method, production capacity, and unit of measure. You then enter the production each period to depreciate the asset according to actual use that period.
> Formula -  
> depreciation = (purchase cost - salvage value) * (Production for the Period ) / expected production capacity
> where
> Production for the Period = current production count - previous production count

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