Finance Re-Categorisation
A component’s finance category is defined by the first entry into the financial transactions ledger posted against that component. Following that, all transactions against that component will utilise that same finance category. To change a component’s finance category, the adjustment must be recorded through the financial transactions ledger as a movement off the original category, and then on to the new category.
Below is a summary of the involved movements posted during a financial re-categorisation from ‘Roads’ to ‘Footpaths’.
| Category | Transaction Type | Value |
|---|---|---|
| Roads | Reclassification (Accumulated Depreciation) | $150 |
| Roads | Reclassification (Gross) | -$200 |
| Footpaths | Reclassification (Gross) | $200 |
| Footpaths | Reclassification (Accumulated Depreciation) | -$150 |
| $0 |
Note: In the above example, the gross value is $200, and the accumulated depreciation is -$150
In the above schedule, the process involves:
- Writing off the accumulated depreciation value from the old category
- Writing off the gross value from the old category
- Writing on the gross value for the new category
- Writing on the accumulated depreciation value for the new category
Importantly, the net change in carrying value for the component is zero.