Example - DB1/SL Depreciation
A fixed asset has an acquisition cost of LCY 100,000. In the FA Depreciation Books window, the Declining-Balance % field contains 25 and the No. of Depreciation Years field contains 8. The Calculate Depreciation batch job is run biannually.
The FA ledger entries look like this:
| Date | FA Posting Type | Days | Amount | Book Value |
|---|---|---|---|---|
01/01/00 |
Acquisition Costs |
* |
100,000.00 |
100,000.00 |
06/30/00 |
Depreciation |
180 |
-12,500.00 |
87,500.00 |
12/31/00 |
Depreciation |
180 |
-12,500.00 |
75,000.00 |
06/30/01 |
Depreciation |
180 |
-9,375.00 |
65,625.00 |
12/31/01 |
Depreciation |
180 |
-9,375.00 |
56,250.00 |
06/30/02 |
Depreciation |
180 |
-7,031.25 |
49,218.75 |
12/31/02 |
Depreciation |
180 |
-7,031.25 |
42,187.50 |
06/30/03 |
Depreciation |
180 |
-5,273.44 |
36,914.06 |
12/31/03 |
Depreciation |
180 |
-5,273.44 |
31,640.62 |
06/30/04 |
Depreciation |
180 |
-3,955.08 |
27,685.54 |
12/31/04 |
Depreciation |
180 |
-3,955.08 |
23,730.46 |
06/30/05 |
Depreciation |
180 |
-3,955.08 |
19,775.38 SL |
12/31/05 |
Depreciation |
180 |
-3,955.08 |
15,820.30 SL |
06/30/06 |
Depreciation |
180 |
-3,955.08 |
11,865.22 SL |
12/31/06 |
Depreciation |
180 |
-3,955.07 |
7,910.15 SL |
06/30/07 |
Depreciation |
180 |
-3,955.08 |
3,955.07 SL |
12/31/07 |
Depreciation |
180 |
-3,955.07 |
0.00 SL |
* Depreciation start date
"SL" after the book value means that the straight-line method has been used.
Calculation method:
1st year:
Declining-balance amount: 25% of 100,000 = 25,000=12,500+12,500
Straight-line amount = 100,000/8=12,500=6,250+6,250
The declining-balance amount is used because it is the greater amount.
6th year (2005):
Declining-balance amount: 25% of 23,730.46 = 4,943.85= 2,471.92+2,471.92
Straight-line amount = 23,730.46/3 = 7,910.15=3,995.07+3,995.08
The straight-line amount is used because it is the greater amount.