The type of depreciation used is determined by the Inventory F/P Agent. Most stores only need to have 1 agent; however there are instances where multiple agents may be useful. There is also a special agent you can setup "ALL AGENTS". The ALL AGENTS agent can be used when you want to run just 1 depreciation report for all inventory. If you use the "ALL AGENTS" agent you can use the agent field in inventory to hold vendor, supplier, etc information.
Setting up depreciation can be hard to understand, we recommend you call tech support to help you set it up when you start using RTO Pro. Once it is setup all you have to do is run depreciation reports monthly, you would never have to change the settings for depreciation.
Some examples of how to use agents and how to setup depreciation are below.
Example 1: ABC Rental purchases RTO Pro 11-1-98 and opens their store the same day. They purchase all of their own inventory and do not have anybody floorplan any inventory for them so they do not need a retail inventory agent to track inventory that is floorplanned and they do not need to perform flips. They receive inventory using the agent field to track the vendor the merchandise was purchased from. So therefore they have multiple agents. They want to use the special agent "ALL AGENTS" so they only have to run 1 depreciation report per month. In Agent Maintenance they add the agent "ALL AGENTS" and set it up for the depreciation type they wish to use and set depreciation last run date to 11-1-1998. The other agents they do not setup for depreciation. When they run depreciation the report will depreciate all inventory on 1 report.
Example
2: ABC
Rental purchases RTO Pro 11-1-98. They receive all old inventory that
they were using a manual system to depreciate with an agent name of "ABC
OLD". They do not setup "ABC OLD" for depreciation instead
they plan to continue with the manual system to depreciate these items.
All items that have not began depreciating yet and all merchandise received
after 11-1-98 they receive with "ABC NEW" as the agent. They
set up "ABC NEW" for 3 year MACRS depreciation. They also set
up 11-1-98 as the Last Depreciation Ran date. (See Agent Maintenance).
Then Monthly after the first of each month they would run a depreciation
report for "ABC NEW". (Depreciation reports do not have to be
run monthly, you could wait until the end of the year and run all months
at one time.)
Example 3: ABC Rental does a lot of retail sales and they want to be able to get retail cost of sale figures weekly. In this case they would want to have at least 2 agents, a retail agent and a rental agent. The rental agent would be setup for the type of depreciation you wish to use. The retail agent would not be setup for depreciation.
ABC Rental purchases RTO Pro 11-1-98. They receive all old inventory that they were using a manual system to depreciate with an agent name of "ABC OLD". They do not setup "ABC OLD" for depreciation instead they plan to continue with the manual system to depreciate these items.
All items that have not began depreciating yet and all merchandise received after 11-1-98 they receive with "ABC RETAIL" as the agent. They also create an agent named "ABC RENTAL" and set it up for 3 year macrs depreciation. They also set up 11-1-98 as the Last Depreciation Ran date.
Once a week, or whenever they wanted they would run a flip report. They select agent to flip from as "ABC RETAIL" and flip to "ABC RENTAL". When they run this report it shows them the inventory that was sold and gives the total cost of sale for these items. It also shows items that are flipped to "ABC RENTAL" (The items flipped to "ABC RENTAL" would be the items that were rented out so that they may begin depreciating.). Monthly they would run the depreciation report for the agent "ABC RENTAL". This report gives them the depreciation or rental cost for the month.
Agents can also be used to handle inventory that is financed or floor planned by banks, etc.
Above are only examples of how depreciation works it is generally different from store to store depending on how you wish to handle it. RTO Pro can also depreciate merchandise that you were doing manually before, however to set it up for that the merchandise must be loaded and then edited for the correct balance (cost – depreciation claimed) and depreciation began date (See Inventory Maintenance). To setup old merchandise for depreciation in the above examples you would load all old inventory that has begun depreciation as "ABC NEW" then edit the balances and begin depreciation date, then RTO Pro would depreciate all of the old inventory for you also.
Types of depreciation that can be used with RTO Pro:
"1 = 'Term of Lease' Straight Line over lease term." : This is straight line depreciation over the term of the lease.
"2 = 'Modified Term of Lease' No Depr. while In Stock." : Same as above except when an item is returned to stock it does not depreciate.
"3 = 'MACRS GDS 200DB HY Convention 5 Year Recovery Period'" : Modified Accelerated Cost Recovery System, General Depreciation System with 200% declining balance method (200% DB) over a 5-year recovery period.
"4 = 'MACRS GDS 200DB HY Convention 3 Year Recovery Period'" : Modified Accelerated Cost Recovery System, General Depreciation System with 200% declining balance method (200% DB) over a 3-year recovery period.
"5 = 'Straight Line from date received' # of months is changeable" : This is straight line depreciation from the date received, you select the number of months for recovery period.
"6 = 'MACRS GDS 200DB HY Convention 2 Year Recovery Period" : Modified Accelerated Cost Recovery System, General Depreciation System with 200% declining balance method (200% DB) over a 2-year recovery period.
"7 = 'MACRS GDS 150DB HY Convention 3 Year Recovery Period'" : Modified Accelerated Cost Recovery System, General Depreciation System with 150% declining balance method (150% DB) over a 3-year recovery period.
See Flip Report