Improvement Analysis Video

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Improvement Analysis Video Transcript  

Hi, and welcome to the AgWare DataLog Improvement Analysis tutorial video.  During this video, I will show you the different methods that DataLog offers for calculating improvement depreciation in the improvement analysis section.

When you have a sale open, scroll down to the improvement analysis section.  If it’s not expanded, go ahead and expand it by clicking the down arrow button on the right side of the title bar or by clicking anywhere on the title bar.  As you can see, there is a button in this section titled Improvement Options.  This is where you will select which method you would like to use.  When you click on the improvement options button, you will see options to calculate the physical depreciation percentage, calculate the external depreciation percentage, a line that shows you your current input method and a way to change it, and lastly, clear all improvements.  We’ll start with the easiest thing to explain … clear all improvements.  When you click this button, it will clear all of your improvements in this sale.  You will be prompted with a message that informs you that all improvement data will be cleared and it will ask if you want to continue.  

Now, let’s talk about the input options.  Again, you can access these options by clicking the improvement options button and then clicking on Input Method.  This will bring up a dialog box.  

The first option you will see is the enter percentages method.  When using this method, percentages are entered for each of the depreciation types – physical, functional, and external.  The improvement contribution is calculated based on these percentages, and the effective age will be calculated for you.  This is DataLog’s default setting.  Users can either enter all the depreciation percentages manually, or they can use additional options to calculate physical and external depreciation percentages for them.  Let me demonstrate.  In order to calculate the depreciation, you have to have a sale price entered.  As you can see here highlight the CEV price in the allocation summary section my sale price is $250,000, and I have $50,000 allocated to my land.  That leaves $200,000 that needs to be allocated to my improvements.  Let’s enter in some improvements.  I’ll put a house that has 1500 square feet with a total life of 60 and an rcn/unit of $100.  For each improvement you have to enter in the size, total life, and rcn/unit for each improvement.  Let’s enter a second improvement – I’ll add a barn that’s 3000 sq ft with a total life of 40 and an rcn/unit of $25.  You can see that my sale is now $25,000 over allocated.  Now I need to enter in my physical depreciation.  I can either type this in or let DataLog calculate it for me.  To showcase the new feature, I will let DataLog do this for me.  I’ll go up to the improvement options button, and click on the first line – calculate physical %.  When I click this, notice that the physical percent will automatically fill in as well as the effective age.  The total contribution will also change.  This made my dollars allocated and sale price almost even – I’m only $3 over-allocated now, compared to the $25,000 before I calculated the physical percentage.  

The second option is to enter the contribution amount.  I’m going to clear the improvements that I have entered in on this sale to demonstrate the next option.  Remember to clear all improvements on a sale, you click on the improvement options button, and then click clear all improvements.  Now, I’m going to change the input method.  Click on the improvement options button, then select input method.  This brings up the dialog box – click on the second option – Enter contribution.  For this entry method, improvement contribution is the main entry field.  Notice how the improvement contribution field no longer has the padlock that indicates a calculated field.  In addition, you can see that the physical depreciation field now has the padlock icon since it will now be calculated.  The physical depreciation will automatically be calculated to make the RCN and improvement contribution match.  The effective age will be calculated for you.  Let’s go ahead and enter an improvement.  I’ll put a house that has 1500 square feet with a total life of 60 and an rcn/unit of $100.  Now, for this method, go all the way down to total contribution and enter in the contributory value of this house.  I’m going to say it contributes $125,000.  When I enter in the total contribution, notice that the physical depreciation percentage and the effective age automatically calculate.  You’ll notice that the calculate physical percentage and calculate external percentage buttons have been deactivated for this input method.  You can still enter functional and external depreciation percentages for this method, and it will automatically adjust the percent physical, so that the total contribution stays the same.

The last option is to enter the effective age.  I’m going to clear the improvements that I have entered in on this sale to demonstrate this last option.  Now, I’m going to change the input method.  This brings up the dialog box – click on the third option – enter effective age.  When you select this option, you will notice that the math options on the right hand side become disabled.  When using this method, the effective age the main input field and it is used to calculate the physical depreciation.  The functional and external depreciation are still entered as percentages.  To demonstrate, let’s enter in some improvements.  I’ll put a house that has 2,500 square feet with a total life of 60 and an effective age of 18.  Next, I’ll enter an rcn/unit of $100.  When you enter in the effective age, you will notice that the percent physical depreciation calculates.  I’m also going to enter a second improvement, so I’ll enter a barn that is 3,000 square feet with a total life of 40 and an effective age of 12.  Then, I’ll enter 25 for the rcn/unit.  Now, you’ll see that my sale is $27,500 over allocated.  Let’s say I have external depreciation on these improvements as well.  I’ll click on the improvement options button and click calculate external percentage.  Notice this brings my allocated dollars within $4 of the sale price.

Just to recap, DataLog has three methods for calculating improvement depreciation – the enter percentages method, the enter contribution method, and the enter effective age method.  When you open a new sale, the system will remember what improvement method was last used when calculating depreciation.  You can change the depreciation input method by scrolling to the improvement analysis section and clicking on improvement options, then clicking on input method.

I hope this tutorial was helpful for you today.  If you have any questions or comments, please don’t hesitate to give us a call at 605-787-7871 or send an email to support@uaar.net.  Thank you for taking the time to view this online video, and thank you for choosing the AgWare software.

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