Repositioning Depreciation and Amortisation

By default, Castaway reports Depreciation and Amortisation expense below the EBITDA line of the Profit & Loss report. We took this approach so that the difference between EBITDA and EBIT is clear.

However, some users prefer to show Depreciation and/or Amortisation higher up the Profit & Loss report, often as a part of Direct Costs.

We achieve this in Castaway by setting up a Depreciation/Amortisation transfer, (similar to a journal entry), from within the Fixed Asset element. By following the steps below, the EBITDA figures on the Profit & Loss report will calculate correctly.

To reposition Depreciation and/or Amortisation expense

  1. Create a Costs element in the desired position (using the Chart of Accounts or Forecast Designer)
  2. Open the data enter screen for the specific Fixed Asset element(s) for which you wish to transfer the depreciation
  3. From the Depreciation menu, choose an option from the Depreciation Transfer Method (many users prefer ‘% of Monthly Expense’), then click OK




  4. Click the Element Transfers tab (above the element properties area), then Add Transfer. Next, click on ‘TRANSFERS (REPORT CURRENCY) - Depreciation to Cost’



  5. From the Select Transfer Destination dialog, choose the Costs element you want to move the Depreciation expense to, then click OK. In this case, we're transferring to a Costs element called Depreciation



  6. Enter the amount of monthly depreciation expense to be transferred to the destination Costs element. The data required depends on the Transfer Method chosen in Step 3 above. Note that it is possible to create multiple transfers out of a single Fixed Asset element



  7. The Profit & Loss report will now show the depreciation expense being transferred out of the Depreciation expenses area and up to the Costs element

 

Entering Actuals data for Depreciation/Amortisation Transfers

To ensure that EBITDA calculates correctly in the Profit & Loss report for Actuals months, it is important to enter/import the Actuals data correctly.

If you are manually entering Actuals data, go to Data > Actuals Data > Enter Profit & Loss to bring up the Actuals data entry screen, then:

  1. Enter the depreciation/amortisation expense for each relevant Fixed Asset element line below the EBITDA line
  2. Enter the amount of depreciation/amortisation to be transferred as a negative against the name of the destination Costs element (in this case, 'Depreciation')



  3. Against the destination Costs element, enter the total Actual expenses for the month, including the total depreciation transferred to the element.

 

Download sample files for both setup and entering Actuals data for Depreciation Transfers here:

 

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