Calculating Replacement Value

How do I calculate Replacement Value?

In the General Information fields in Asset Detail there are two fields for Replacement Value. One is Replacement Value, and the other is RV Override. (For information on entering an amount in the RV Override field, see Overriding Replacement Value.) The system automatically updates the Replacement Value in the Replacement Value field each time that you calculate depreciation for the Replacement Value book (using the Depreciate command on the Depreciation menu).

Because Replacement Value is an annual amount, you enter one Replacement Value index per year. However, you probably update depreciation on a monthly basis. Each time depreciation is calculated, the same Replacement Value amount (that is, the annual Replacement Value amount) is re-entered in the Replacement Value field. However, once you calculate depreciation for any period of time in the next fiscal year, the next year’s annual Replacement Value amount is displayed. This occurs whenever you calculate depreciation for any period of time in the fiscal year for the book that you selected on the RV Setup tab of the Replacement Value window.

Note: If an asset does not have an entry in the General Information field on which you are basing the RV calculations, the system will not calculate Replacement Value.

Example: If you select the Internal Book on the RV Setup tab, look at the Current Through Date field in the Internal Book in Asset Detail. For a calendar year-end company, if the Current Through Date field displays 6/11, the Replacement Value field displays the 2011 Replacement Value. If you enter an RV Override amount in Asset Detail, the amount of the override is used as the starting point for calculating Replacement Value (instead of the Acquisition Value field).

The system does not calculate Replacement Value for an asset in the year in which the asset is placed in service. If you want the Replacement Value to be different from the asset's Acquisition Value in the first year, use the Override RV field.