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Depreciation Keys?

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Depreciation Keys?..

Depreciation keys = depreciation method + depreciation rate.

depreciation method could be slm(straight line method),
wdv(written down value method)etc

depreciation rate is nothing but the percentate like 5%, 6%,etc

hence dep key = slm + 5 %

 Is This Answer Correct ? 46 Yes 8 No

Depreciation Keys?..

You are aware that every fixed asset keeps losing value as
time progresses and the loss of value is called as depreciation.

Depreciation Keys are pre-defined mathematical functions
which perform number crunching so as to reduce the value of
asset (usually) with the passage of time.

A Depreciation Key is a bundle of various methods of
standardized depreciation. A depreciation key contains

a. Base method (such as straight line depreciation etc.)

b. Declining Balance Method ( more affectionately known as
WDV method, Written Down Value Method)

c. Maximum Amount Method ( an arbitrary pre-defined amount
up to which depreciation of an asset can be carried out)

d. Multi-level method ( which is a mixed bag of one or more
of the aforesaid methods ) . Usually it has been
mathematically proved that the Declining Balance Method
cannot be effective in writing off the value of an asset in
full ( viz. reduce to zero balance) in a finite period of
time. In order to avoid this complication, you can use
multi-level method which effects a change-over from
declining balance method to straight line method under
certain conditions pre-defined in the depreciation methods/
keys)

e. Period Control Method ( this tells you the date on which
capitalization / de-activation, start of depreciation could
commence with regard to asset acquisition, additions to it,
retirement and transfer ).

All these depreciation methods are bundled into a
depreciation key which is assigned to the asset master record.

There are many depreciation keys available and you can
create them too. Usually they are country-specific.

Assignment of a suitable depreciation key to the asset
master helps in the fair valuation of assets and profits /
losses ( through fair estimation of depreciation of assets).

Hope it is clear. Please feel free to share with any other
information that I might have missed out

Regards

 Is This Answer Correct ? 31 Yes 1 No

Depreciation Keys?..

Dep key is the key which contains the valuation methods
under particular dep area.

 Is This Answer Correct ? 33 Yes 9 No

Depreciation Keys?..

Depreciation is the process of expensing out your asset
(owing to various reasons such as wear and tear, change in
fashion/technology, unforeseen calamities etc.).
Depreciation normally occuring uses some standard and
acceptable methodologies. SAP defines such methodologies
such as depreciation methods ( Base method, declining
balance method, max.value method, period control method and
multilevel method which is a mixed bag of the other methods
described above). A Depreciation key can be considered as a
box which houses all the depreciation methods described
above. A suitable depreciation key and the estimated useful
life of the asset usually work together in finding out how
to expense out the value of asset ( viz. depreciate the
asset). When applied , the asset value keeps decreasing over
its estimated useful life in accordance with the norms
specified in the depreciation key whereby the asset value is
usually reduced to NIL when the useful life of the asset ends.

 Is This Answer Correct ? 8 Yes 4 No

Depreciation Keys?..

Depreciation key help to calculate the depreciation automatically on asset master data, the depreciation key may be strightline method and writtendown method we should assign depreciation key to asset master

 Is This Answer Correct ? 6 Yes 2 No

Depreciation Keys?..

Depreciation key is to specify the Dep method ( WDV/ SLM & Rate or Useful Life)
In addition to these, we put some controls to restrict the mastakes may be done by End users.
Base Line Method, it specifies depn to be calculated on the basis of useful life or %..
Deciling balance method - It specifies min% & Max% in which dep to be allowed ( If useful life wrongly taken by end user it will restrict)
Max amount method - It specify the amx amount that can be allowed ( Control to restrict the mistake)
Period COntrol Method - It specifies the depn to be taken for whic period
Multi Level Method - It specifies the method of Depn ( whether SLM/ WDV)

In this Base Line Method, Period Control Method & Multi level method are mandatory
Max Amount Method & Declining methods are for controls ( Optional)

 Is This Answer Correct ? 0 Yes 0 No

Depreciation Keys?..

Sandhya you are absolutely right.
Thanks,
Majid

 Is This Answer Correct ? 8 Yes 9 No

Depreciation Keys?..

depreciation Key is used to calculate the depreciation on
the asset.In the depreciation key we have calculation
methods.Based on the Base method calculation method of
depreciation would be decided like based on the life of the
asset,Explicit percentage,immediate depreciation,manual
depreciation.Suppose if it is based on the explicit
percentage in multi level method we have give the percentage
and base value of the asset.

 Is This Answer Correct ? 1 Yes 3 No

Depreciation Keys?..

Depreciation key contains the value of setting which are
necessary for determining depreciation amount. It define
level of chart of depreciation available all company code
it mainly using planned depreciation.

 Is This Answer Correct ? 5 Yes 8 No

Depreciation Keys?..

A key for calculating depreciation amounts.
The depreciation key controls the following for each asset
& for each depreciation area,
(1)Automatic calculation of planned depreciation
(2)Automatic calculation of Interest
(3)Maximum Percentage for manual depreciation.

 Is This Answer Correct ? 12 Yes 19 No

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