DD&A Rules

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Rules pertaining to depreciation, depletion, amortization, and impairment are set up in the DD&A Rules screen. You can use this screen to set up the DD&A or Impairment method and then link it to an expense and a liability account.

To maintain DD&A rules:

1. Navigate to the menu and select Fixed Assets → DD&A Rules

2. Enter DD&A rules information.

In this field...	Enter this information...

In this field...	Enter this information...
DD&A Rule Code	A user-defined code for the DD&A rule with additional description.
Accumulated DD&A Account	Accumulated depletion or depreciation account. Enter a major/minor account or select from the Accounts List of Values. The system will display the account description.
Expense Account	Depletion or depreciation expense account. Enter a major/minor DD&A expense account or select from the Accounts List of Values. The system will display the account description.
DD&A/Impairment Method	Calculation method used for the DD&A Rule. Select from the DD&A Methods List of Values. Description field is automatically populated. AMO - Amortization (over remaining useful life) - No Rate Required DED - Declining Balance Depreciation DES - Straight Line Depreciation DP1 - Depletion based on Proved Developed Reserves (rate is calculated as Production divided by Total Proven Developed Reserves) DP2 - Depletion based on Total Proved Reserves (rate is calculated as Production divided by Total Proven Developed + Proven Undeveloped Reserves) DP3 - Depletion based on Total Proved and Probable (rate is calculated as Production divided by Total Proven Developed + Proven Undeveloped + Probable Reserves) IMA - Impairment on Aggregate Insignificant Leases IMS - Impairment on Significant Leases
Hierarchy	Hierarchy used for the DD&A rule is applied. A hierarchy is only required for DD&A methods DP1, DP2, and DP3 which apply to depletion calculations. When entered it will be used for depreciation calculations for reporting. Enter a hierarchy or select from the Hierarchies List of Values. The system automatically populates the description field.
Level	Reporting level at which the DD&A rule is applied for depletion calculations. Production volumes and reserves are entered at this level. Enter a reporting level or select the Reporting Levels List of Values. The system automatically populates the description field.
Book Monthly, Quarterly, YTD	Default is Monthly. Depreciation is calculated Monthly. If this field is set to Quarterly or YTD, a reversal in the subsequent accounting period is automatically booked. Typically, depletion is set up with the Quarterly or YTD option to allow for material reserve adjustments.
DD&A Salvage Value Percent	Percent applied to Gross Book Value to calculate the estimated salvage value for an asset.
DD&A Annual Percent	Annual percentage rate to use for the depreciation calculation methods DED - Declining Balance or DES - Straight Line.
DD&A Write Off Amount	Write-off amount in the Organization’s Operating Currency. If the Net Book Value depletion rate is less than this write off amount, the write off amount will be taken as the depreciation amount. The dollar value at which depreciation equals opening net book value.
Deactivated	The date that the record became inactive, in the format YY/MM/DD.
By	The system automatically populates the user ID of the person who deactivated the record.

4. Select the Save Record icon to save the information.

5. Select the Exit icon to close the screen.