1. How Can I Do Depreciation and Depletion?
Beth Yates
Customer Success Team Lead, Team 2

2. Purpose
The purpose of this class is to explain how WolfePak can calculate depreciation and depletion for company assets in a quick and efficient way and highlight the interaction with the General Ledger.

3. Fixed Assets Benefits Depreciate quickly and easily! Minimizes errors
Tax basis and GAAP basis reporting
No manual entries-WolfePak interacts with the General Ledger
Record the book value of the asset

4. Depreciation
Fixed Assets module-helps manage depreciation entries. WolfePak can accommodate a brand new setup or conversion
Can have up to seven sets of books-Three sets of books are already defined: GL, TAX, and AMT (Alternative Minimum Tax)
30 Pre-defined Classes maintained by WolfePak. Need a new one? WolfePak will add a specific IRS Class Code to be maintained. User can have a User Defined Class Code.

5. Depreciation Need to Know
Accounts for Depreciation
Depreciation Method
Depreciation Life
Convention
Does it need to be reported on Form 4562?

6. Setup
Set up accounts: Asset, Accumulated Depreciation, and Depreciation Expense in Account Maintenance (F11).
Set up Asset Books if more than the three pre- defined asset books are needed. Match to an existing book. Changes can be made at the asset level.
Lock Detail Records to keep prior month/years depreciation from changes.

7. Asset Classes
Asset Classes group the assets. Over 30 pre-defined classes. Others can be added.
Default classes can be overridden.
Add new classes in Asset Class Maintenance only if necessary.

8. Account Codes and Assets
Tells WolfePak where the asset information pulls from and where the depreciation should post to when using Create GL Entries.
Define the Default Class
Assets
Import from GL (recommended) or manually enter
Is the asset New (default) or Used?
Complete additional tabs for setup if applicable.

9. Import From GL
Will import entries not previously entered based on asset accounts set up in Account Codes.
WolfePak will auto-assign the asset number
Override default class code, merge selected entries, split selected entries, delete selected entries
Make note of the Import Time Stamp to Undo Prior if necessary.
View assets in Asset Maintenance.

10. Adjust Accumulated Depreciation, Sec 179, and Bonus Depreciation
Input fiscal year and book.
Make adjustments
Click Generate or Update

11. Create GL Entries
Can create monthly or yearly entries for any existing book.
Verify Tax Report before creating. View entries before creating.
Asset changes after creating entries? No problem! WolfePak can create correcting entries

12. Reports
Depreciation Schedule
Tax Report
GL Verification Report

13. GAAP Depletion
Used to make entries to adjust Net Book Value via the assets accumulated depletion accounts.
Pulls information from the GL that could originate from other modules such as AP, Check Stub, or GL.

14. The Flow Accounts Payable – enter the invoice/JIB received
Check Stub Entry – record the revenue detail for each stub by asset (well) and production date
General Ledger- Manual entries
Update the Accumulated Depletion for the desired month.

15. Chart of Accounts
One asset account for each type of asset (Leasehold, Intangible, etc.)
Accumulated Depletion account for each type of asset
At least one Depletion Expense account
Revenue Accounts- Oil, Gas , and Product Sales are currently supported

16. Calculations
Compute the Depletion Base – (Leasehold accounts – accumulated leasehold depletion) + (Intangible Accounts – accumulated intangible depletion) + (P&A accounts – accumulated P&A depletion) + (Tangible Accounts – accumulated Tangible depletion) = Depletion base  
Compute the Unit Depletion Rate – Current Period Production / Current Reserves  
Charge the depletion based on units of production for the current period – Depletion Base x Unit Depletion Rate

17. Setup Setup Company Maintenance Property Maintenance/Reserves Tab
Proved Reserves (PR) look at the Reserve Study
Proved Developed Reserves (PD) look at the Proved Developed Reserve Study
Reserve Studies are added on the Property Maintenance/Reserves tab

18. Generate Depletion Calculate depletion in Depletion Reserves Reports
Enter Month/Year effective date
Review entries in View Trend (F4)
Excel workbook created contains calculations
Reports
Depletion Schedule
Reserve Listing

19. Depletion Depletion Calculations for tax purposes
Automatically compiles current year property leasehold costs, production revenue sales and costs, and production revenue sales volumes from the WolfePak General Ledger System.
Calculates both Percentage Depletion and Cost Depletion for a property and identifies the larger of the two deductions.

20. Depletion Setup Company Maintenance General Tab Current Cycle Tab
GL Information Tab
GL Account Tab

21. Lease/Property Information
Used to maintain lease information
Can enter information manually or Start Reporting Cycle and Import Values From GL only.
Review for accuracy

22. Depletion Cycle Start Reporting Cycle Import Values from G/L
Edit Imported amounts
Compute Depletion

23. Calculation Example

24. Calculation Example

25. Reports 65% Limitation Report Cost Depletion Report
Percent Depletion Report
Create Annual GL Entries

26. Entries

27. Questions