Relying on the Period Close Calculations
Why should I conduct a period close?
The Period Close feature allows you to store current depreciation values for all assets. This feature locks in your calculations to ensure that your historical balances will always tie out as of the Period Close date.
For example, if you make changes to the asset attributes, such as estimated life or depreciation method, you can make the change effective as of the Period Close date. This means your beginning balance is secured and the change will affect only the ongoing calculations.
The system uses the Period Close amounts as a "starting point" when you calculate depreciation. The Period Close amounts serve as the foundation on which future depreciation is calculated.
You enter an asset In January of 2022, and you calculate depreciation on the asset each month. In December 2022, you conduct a Period Close for a group of assets that includes this asset. The information in the current depreciation fields for December 2022 is now saved in your Period Close depreciation fields.
You continue to calculate depreciation monthly through March 2023. Then you realize that an error was made on the asset during the original data entry, and you need to change the estimated life from seven years to five years.
After you make the depreciation-critical change, the system will recalculate depreciation, starting with the December 2022 values, which are locked in and stored in the Period Close fields. The system will also calculate an adjustment as of December 2022 for the change in estimated life. Therefore, you are able to make the depreciation-critical change and claim an adjustment in the current year, without restating your historical values.