Short Years Example
Suppose that the Original Company was established in May 2002 and decided to use a fiscal year-end of April. In 2005, the company adopted a new fiscal year-end of December. In 2010, the Bigger Company bought the Original Company and required that it change its fiscal year-end to September, to match its own. How would you enter this in the application?
Note that the first year of business for the Original Company was not a short year. Enter a Business Start Date of 5/2002. For the fiscal year-end, on the Book Defaults tab, you enter April. The company had two subsequent short years, so you select the Short Years tab. In the Year 1 field, you enter the first new fiscal year-end date, 12/2005. Then you enter the second new fiscal year-end date of 09/2010 in the Year 2 field.
The application considers the fiscal year-end from 12/2005 through 2009 to be December, and the fiscal year-end after 12/2009 to be September. The Fiscal Year End field on the Book Defaults tab now displays September. The application automatically makes all adjustments necessary to prorate depreciation for the short years when you update depreciation.