A fixed asset has an acquisition cost of LCY 100,000. The Depreciation Starting Date is 03/01/00. The estimated life is five years, so the Depreciation Ending Date must be 06/30/05. The Calculate Depreciation batch job is run annually. This example is based on a calendar fiscal year.
The FA ledger entries look like this:
| Date | FA Posting Type | Days | Amount | Book Value |
|---|---|---|---|---|
03/01/00 | Acquisition Cost | * | 100,000.00 | 100,000.00 |
12/31/00 | Depreciation | 270 | -10,000.00 | 90,000.00 |
12/31/01 | Depreciation | 360 | -20,000.00 | 70,000.00 |
12/31/02 | Depreciation | 360 | -20,000.00 | 50,000.00 |
12/31/03 | Depreciation | 360 | -20,000.00 | 30,000.00 |
12/31/04 | Depreciation | 360 | -20,000.00 | 10,000.00 |
12/31/05 | Depreciation | 180 | -10,000.00 | 0.00 |
* Depreciation start date
Example - DB1/SL Depreciation Using Half-Year Convention
A fixed asset has an acquisition cost of LCY 100,000. The Depreciation Starting Date is 11/01/00. The estimated life is five years, so the Depreciation Ending Date must be 06/30/05. In the FA Depreciation Books window, the Declining-Balance % field contains 40. The Calculate Depreciation batch job is run annually. This example is based on a calendar fiscal year.
The FA ledger entries look like this:
| Date | FA Posting Type | Days | Amount | Book Value |
|---|---|---|---|---|
11/01/00 | Acquisition Cost | * | 100,000.00 | 100,000.00 |
12/31/00 | Depreciation | 60 | -20,000.00 | 80,000.00 |
12/31/01 | Depreciation | 360 | -32,000.00 | 48,000.00 |
12/31/02 | Depreciation | 360 | -19,200.00 | 28,800.00 |
12/31/03 | Depreciation | 360 | -11,520.00 | 17,280.00 |
12/31/04 | Depreciation | 360 | -11,520.00 | 5,760.00 SL |
12/31/05 | Depreciation | 180 | -5,760.00 | 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:
Full year amount = 40% of 100,000 = 40,000. Thus, for half a year 40,000 / 2 = 20,000
Straight-line amount:
Full year amount = 100,000 / 5=20,000. Thus, for half a year = 20,000 / 2 =10,000
The declining-balance amount is used because it is the greater amount.
5th year (2004):
Declining-balance amount: 40% of 17,280.00 = 6,912.00
Straight-line amount = 28,800/1.5 = 11,520.00
The straight-line amount is used because it is the greater amount.