Calculation issue of additional depreciation in subsequent year under Income tax act in the Indian version of Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, and Microsoft Dynamics AX 2009 SP1

This article applies to Microsoft Dynamics AX for the Indian (in) region.

This issue will arise when you try to compute special depreciation in second year for a fixed asset. In case of acquisition and use of a new fixed asset less than 180 days in the first year of acquisition, 50% of depreciation rate will apply for additional depreciation calculation. Balance 50% additional depreciation to be available in succeeding year. Earlier balance 50% cannot be claimed as additional depreciation in succeeding years. As additional depreciation was only allowed in the first year. Even core special depreciation method allows computing depreciation in first year only.

Here are the steps for this issue:

  1. Go to Fixed assets> Setup > Fixed asset parameters

    • The Income tax Act depreciation checkbox is marked

    • Mark the Use special depreciation allowance checkbox

    • The Depreciation threshold percentage = 50%

  2. Go to Fixed assets > Setup > Depreciation > Special depreciation allowance

    • Create a new record for required special depreciation percentage/amount

  3. Go to Fixed assets > Setup > Value models

    • Create a new value model with Asset group depreciation marked

    • Attach a depreciation profile of method Reducing balance, Period frequency = Yearly

  4. Go to Fixed assets > Setup > Fixed asset groups

    • Create a new fixed asset group

    • Attach the value model created, to the fixed asset group

    • Attach the special depreciation allowance created, to the value model, with required priorities

  5. Go to Fixed assets > Setup > Fixed asset posting profiles

    • For transaction type Acquisition, Depreciation and Special depreciation, Set Main accounts and offset account for the new Value model created.

  6. Go to Fixed assets > Common > Fixed assets

    • Create two new fixed assets (FA-1 and FA-2) with Fixed Asset group as the one created above

    • One of the assets (FA-2) is placed in service such that the asset is put to use for less than 180 days in the financial year

  7. Go to Fixed assets > Journals> Fixed asset journal

    • Post a fixed asset journal for the two assets created above in Tax layer

  8. Go to Fixed assets > Common > Fixed assets

    • Select FA-1- Verify the Special depreciation profile under Inquiry for Value model

    • The special depreciation for asset FA-1 is displayed for the current financial year

    • Select FA-2 - Verify the Special depreciation profile under Inquiry for Value model

    • The special depreciation for asset FA-2 is displayed for current financial year and the immediate succeeding financial year. (As the asset was used for < 180 days in the previous year)

    • Only 50% of the special depreciation allowance % is availed in the current year. Remaining % is carried forward to the immediate succeeding financial year (if the asset exists).

    • Validate the depreciation profile for the asset group

  9. Go to Fixed assets > Journals > Fixed asset journal

    • Post special depreciation for current financial year

  10. Go to Fixed assets > Common > Fixed assets

    • Select FA-1- Verify the Special depreciation profile under Inquiry for Value model

    • The special depreciation button is disabled for FA-1

    • Select FA-2 - Verify the Special depreciation profile under Inquiry for Value model

    • The special depreciation for asset FA-2 is displayed for the next financial year is displayed

    • Validate the depreciation profile for the asset group

  11. Go to Fixed assets > Journals > Fixed asset journal

    • Post special depreciation for immediate next financial year

  12. Go to Fixed assets > Common > Fixed assets

    • Select FA-1- Verify the Special depreciation profile under Inquiry for Value model

    • The special depreciation button is disabled for FA-1

    • Select FA-2 - Verify the Special depreciation profile under Inquiry for Value model

    • The special depreciation button is disabled for FA-2

    • Validate the depreciation profile for the asset group – The special depreciation posted for the two years will reflect for the posted value for the respective years


Resolution

The changes in the hotfix ensure you can compute special depreciation not only in the year of acquisition.

Hotfix information

A supported hotfix is available from Microsoft. There is a "Hotfix download available" section at the top of this Knowledge Base article. If you are encountering an issue downloading, installing this hotfix, or have other technical support questions, contact your partner or, if enrolled in a support plan directly with Microsoft, you can contact technical support for Microsoft Dynamics and create a new support request. To do this, visit the following Microsoft website:

https://mbs.microsoft.com/support/newstart.aspx You can also contact technical support for Microsoft Dynamics by phone using these links for country specific phone numbers. To do this, visit one of the following Microsoft websites:

Partners

https://mbs.microsoft.com/partnersource/resources/support/supportinformation/Global+Support+ContactsCustomers

https://mbs.microsoft.com/customersource/support/information/SupportInformation/global_support_contacts_eng.htmIn special cases, charges that are ordinarily incurred for support calls may be canceled if a Technical Support Professional for Microsoft Dynamics and related products determines that a specific update will resolve your problem. The usual support costs will apply to any additional support questions and issues that do not qualify for the specific update in question.


Installation information

If you have customizations for one or more of the methods or the tables that are affected by this hotfix, you must apply these changes in a test environment before you apply the hotfix in a production environment.
For more information about how to install this hotfix, click the following article number to view the article in the Microsoft Knowledge Base:

893082 How to install a Microsoft Dynamics AX hotfix

Prerequisites

You must have one of the following products installed to apply this hotfix:

  • Microsoft Dynamics AX 2012 R3

  • Microsoft Dynamics AX 2012 R2

  • Microsoft Dynamics AX 2009 SP1

Restart requirement

You must restart the Application Object Server (AOS) service after you apply the hotfix.

File information

The global version of this hotfix has the file attributes (or later file attributes) that are listed in the following table. The dates and times for these files are listed in Coordinated Universal Time (UTC). When you view the file information, it is converted to local time. To find the difference between UTC and local time, use the Time Zone tab in the Date and Time item in Control Panel.

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