Standard depreciation method description > Attached document: American standard depreciation method description
American standard depreciation method description
This document is an appendix to the documentation on the setup of Depreciation methods.
In standard, Sage X3 comes with a number of depreciation methods.
Some are associated with a given legislation, while others are common to all legislations.
This document describes the calculation principles of the depreciation methods associated with the American legislation.
The other methods are described in appendix documentations, which can be accessed from the documentation on the depreciation methods common to all legislations.
UL - Straight line
This straight-line depreciation method is used in the United Kingdom and the United States.
Depreciation origin
It is dependent on the type of prorata temporis specified by the user in the depreciation plan:
- If prorata = Month (Month) --> Depreciation starts on the 1st day of the month of the depreciation start date (1)
- If prorata = ½ month (Mid-Month) --> Depreciation starts in the middle of the month of the depreciation start date. (2)
- If prorata = ½ quarter (Mid-Quarter) --> Depreciation starts in the middle of the quarter of the depreciation start date. (3)
- If prorata = ½ year (Half-Year) --> ½ annuity applies in the acquisition fiscal year (4)
(1) Regardless of the day of the depreciation start date.
(1) Regardless of the day of the depreciation start date, even if it is the 1st day of the month.
(1) Regardless of the day of the depreciation start date, even if it is the 1st day of the quarter.
(1) Regardless of the day of the depreciation start date and regardless of the fiscal year duration.
Duration
The duration is expressed in years and hundredths of years.
Rate
The depreciation rate cannot be entered by the user. It is automatically calculated, as follows: 1 / duration
Depreciation end date
It depends on the prorata temporis type:
- If the prorata temporis = ½ year:
Depreciation start date = 1st day of the month of the start date of the fiscal year that follows the acquisition fiscal year+ (Depreciation duration – 0,5)
The result is the last day of a month.
- If the prorata temporis = Month:
Depreciation end date = 1st day of the month of the depreciation start date + Depreciation duration
The result is the last day of a month.
- If the prorata temporis = ½ month:
Depreciation end date =
1st day of the month of the depreciation start date + Depreciation duration + 0.5 months
The result is the 15th day of a month.
- If the prorata temporis = ½ quarter:
Depreciation end date =
1st day of the quarter of the depreciation start date + Depreciation duration + 0.5 quarter
The result is the middle of a quarter.
Examples of calculation of depreciation end dates:
Start date | Duration | End date |
01/01/2005 | 3 years and ½ year | 30/06/2008 |
14/10/2005 | 3.25 and ½ year | 30/09/2008 |
01/01/2005 | 5.33 and Month | 30/04/2010 |
01/01/2005 | 3 and ½ month | 15/01/2008 |
08/11/2005 | 3.25 and ½ month | 15/02/2009 |
01/01/2005 | 3 and ½ quarter | 15/02/2008 |
08/12/2005 | 3 and ½ quarter | 15/11/2008 |
Prorata temporis
The type of prorata temporis can be specified by the user or defined by the associations if the depreciation method is itself defined by the associations. It can be modified via the Method change action.
The possible values are the following:
- Prorata = Month (Month)
- Prorata = ½ month (Mid-Month)
- Prorata = ½ quarter (Mid-Quarter)
- Prorata = ½ year (Half-Year)
Depreciation charge
The charge is equal to:
Depreciable value * Depreciation rate * prorata temporis (1)
Notes:
(1) The prorata temporis is expressed either in: ½ year, month, ½ month, or ½ quarter.
- Depreciable value = (Gross value – Residual value)
- If the Depreciation end date is equal to the Fiscal year end date and if the asset is not issued before this depreciation end date, then the Fiscal year charge = Net depreciable value.
- If the Net depreciable value is larger than 0, and the residual depreciation duration is equal to 0 (case where Depreciation end date < Fiscal year start date), then Fiscal year charge = Net depreciable value so as to close the depreciation.
The charge of the disinvestment fiscal year is calculated based on the type of prorata temporis:
- If Prorata = ½ year, the charge of the disinvestment fiscal year corresponds to the fiscal year charge * 50 %.
This applies even in the case where the asset is issued during the fiscal year of the depreciation end.
Ditto if the disinvestment fiscal year differs from 12 months. - If Prorata = Month, the charge is calculated until the end of the month that precedes the disposal month, or until the disposal date if this corresponds to the last day of the month.
- If Prorata = ½ month, the charge is calculated until the middle of the disposal month: there is therefore a ½ charge for the disposal month.
- If Prorata = ½ quarter, the charge of the disinvestment fiscal year corresponds to the fiscal year charge * a percentage that depends on the quarter of disposal of the fiscal year.
- 12.50% (1 ½ quarter / 8) if the Disposal date is in the 1st quarter
- 37.50% (3 ½ quarter / 8) if the Disposal date is in the 2nd quarter
- 62.50% (5 ½ quarter / 8) if the Disposal date is in the 3rd quarter
- 87.50% (7 ½ quarter / 8) if the Disposal date is in the 4th quarter
This rule can be modified by Disposal rules: Disposal at the end of the previous FY and Disposal at the end of the current FY.
Distribution of the fiscal year charge on the periods
If the fiscal year is divided into several periods, the fiscal year charge is distributed over these periods. The distribution rule differs according to the prorata temporis applied:
- If prorata temporis = ½ year or month.
In this case, the holding period starts on the 1st day of the month of the depreciation start date.
Period Charge = Fiscal year charge
*( Σ p1 to pc (Number of holding months in the period )
/ Σ p1 to pf (Number of holding months in the period ) )
- Depreciation total of previous periods
- If prorata temporis = ½ month or ½ quarter.
In this case, the holding period starts:
- either in the middle of the month of the depreciation start date, if Prorata = ½ month,
- or in the middle of the quarter (that is, the middle of the 2nd month of the quarter) in which the depreciation start date is set, if Prorata = ½ quarter.
Period Charge = Fiscal year charge
*( Σ p1 to pc (Number of holding ½ months in the period )
/ Σ p1 to pf (Number of holding ½ months in the period ) )
- Depreciation total of previous periods
p1 to pc = from the 1st holding period in the fiscal year to the current period included (1)
p1 to pf = from the 1st holding period in the fiscal year to the last holding period in the fiscal year
(1) Unless the asset is issued in the fiscal year before this current period or if it is completely depreciated in the fiscal year before this current period. The period retained is thus the minimum period among the 3 following ones:
- period of depreciation end if the Depreciation end date belongs to the interval [period start – period end]
- disposal period if the Disposal date belongs to the interval [period start – period end]
- current period
For this depreciation method, the period weight is not taken into account.
Revision of depreciation plan
- If a method change occurs during the acquisition fiscal year (the fiscal year of the depreciation start date):
- the depreciation method remains Straight line
- the fiscal year charge is re-calculated according to the new characteristics
- the non-closed periods "naturally" absorb the difference in the fiscal year charge. If a method change occurs during a fiscal year that is later than the acquisition fiscal year, or if there is a revaluation of the Depreciable value, or a depreciation is recorded:
- the depreciation method is changed from Straight line to Residual,
- apart from the depreciation that triggers the revision of the plan at the start of the next period, the other actions (method change, actualization of depreciation basis, revaluation) trigger a revision of the plan at the start of the current period.
The fiscal year charge is thus equal to:
Depreciation total of the closed periods
+
"Residual" charge of the fiscal year calculated after the revision of the plan
Examples:
1st example
- Gross value: 10,000
- Residual value: 0
- Depreciation start date: 14/02/2005
- Depreciation duration: 7 years --> Rate: (1/7) = 14.28571%
- Type of prorata temporis: ½ year --> Depreciation end date: 30/06/2012
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2005 – 31/12/2005 | 10,000.00 | (1) 714.29 | 714 ,29 |
01/01/2006 – 31/12/2006 | 9,285.71 | (2) 1,428.57 | 2,142.86 |
01/01/2007 – 31/12/2007 | 7,857.14 | (2) 1,428.57 | 3,571.43 |
01/01/2008 – 31/12/2008 | 6,248.57 | (2) 1,428.57 | 5,000.00 |
01/01/2009 – 31/12/2009 | 5,000.00 | (2) 1,428.57 | 6,428.57 |
01/01/2010 – 31/12/2010 | 3,571.43 | (2) 1,428.57 | 7,857.14 |
01/01/2011 – 31/12/2011 | 2,142.86 | (2) 1,428.57 | 9,285.71 |
01/01/2012 – 31/12/2012 | 714.29 | (3) 714.29 | 10,000.00 |
(1) (10,000.00 * 14.28571%) / 2 = 714.29
(2) 10,000.00 * 14.28571% = 1,428.57
(3) 10,000.00 – 9,285.71 = 714.29
2nd example
- Gross value: 10,000
- Residual value: 0
- Depreciation start date: 14/02/2005
- Depreciation duration: 7 years --> Rate: (1/7) = 14.28571%
- Type of prorata temporis: month --> Depreciation end date: 31/01/2012
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2005 – 31/12/2005 | 10,000.00 | (1) 1,309.52 | 1,309.52 |
01/01/2006 – 31/12/2006 | 8,690.48 | (2) 1,428.57 | 2,738.09 |
01/01/2007 – 31/12/2007 | 7,261.91 | (2) 1,428.57 | 4,166.66 |
01/01/2008 – 31/12/2008 | 5,833.34 | (2) 1,428.57 | 5,595.23 |
01/01/2009 – 31/12/2009 | 4,404.77 | (2) 1,428.57 | 7,023.80 |
01/01/2010 – 31/12/2010 | 2,976.20 | (2) 1,428.57 | 8,452.37 |
01/01/2011 – 31/12/2011 | 1,547.63 | (2) 1,428.57 | 9,880.94 |
01/01/2012 – 31/12/2012 | 119.06 | (3) 119.06 | 10,000.00 |
(1) 10,000.00 * 14.28571% * 11/12 = 1,309.52
(2) 10,000.00 * 14.28571% = 1,428.57
(3) 10,000.00 – 9,880.94 = 119.06
3rd example
- Gross value: 10,000
- Residual value: 0
- Depreciation start date: 14/02/2005
- Depreciation duration: 7 years --> Rate: (1/7) = 14.28571%
- Type of prorata temporis: ½ month --> Depreciation end date: 15/02/2012
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2005 – 31/12/2005 | 10,000.00 | (1) 1,250.00 | 1,250.00 |
01/01/2006 – 31/12/2006 | 8,750.00 | (2) 1,428.57 | 2678.57 |
01/01/2007 – 31/12/2007 | 7,321.43 | (2) 1,428.57 | 4,107.14 |
01/01/2008 – 31/12/2008 | 5,892.86 | (2) 1,428.57 | 5,535.71 |
01/01/2009 – 31/12/2009 | 4,464.29 | (2) 1,428.57 | 6,964.28 |
01/01/2010 – 31/12/2010 | 3,035.72 | (2) 1,428.57 | 8,392.85 |
01/01/2011 – 31/12/2011 | 1,607.15 | (2) 1,428.57 | 9,821.42 |
01/01/2012 – 31/12/2012 | 178.58 | (3) 178.58 | 10,000.00 |
(1) 10,000.00 * 14.28571% * 21 ½ months / 24 ½ months = 1,250.00
(2) 10,000.00 * 14.28571% = 1,428.57
(3) 10,000.00 – 9,821.42 = 178.58
(4) 1,250.00 * 3/21 = 178.57 (3/21 because the asset was held for 3 ½ months during this quarter)
(5) 1,250.00 * 9/21 = 535.71 – 178.57 = 357.14
(6) 1,250.00 * 15/21 = 892.86 – 535.71 = 357.15
(7) 1,250.00 * 21/21 = 1,250.00 – 892.86 = 357.14
UD - Declining balance
This declining depreciation method is used in the United Kingdom and the United States.
Depreciation origin
It is dependent on the type of prorata temporis specified by the user in the depreciation plan:
- If prorata = Month (Month) --> DDepreciation starts on the 1st day of the month of the depreciation start date. (1)
- If prorata = ½ month (Mid-Month) --> Depreciation starts in the middle of the month of the depreciation start date. (2)
- If prorata = ½ quarter (Mid-Quarter) --> Depreciation starts in the middle of quarter of the depreciation start date. (3)
- If prorata = ½ year (Half-Year) --> ½ annuity applies in the acquisition fiscal year (4)
(1) Regardless of the day of the depreciation start date.
(1) Regardless of the day of the depreciation start date, even if it is the 1st day of the month.
(1) Regardless of the day of the depreciation start date, even if it is the 1st day of the quarter.
(1) Regardless of the day of the depreciation start date and regardless of the fiscal year duration.
Duration
The duration is expressed in years and hundredths of years.
Examples:
- 5 for 5 years
- 3.5 for 3 years and 6 months
- 6.66 for 6 years and 8 months
Rate
The depreciation rate cannot be entered by the user. It is automatically calculated according to an acceleration coefficient, as follows:
( 1 / duration ) * acceleration coefficient
This acceleration coefficient must be specified by the user or defined by the associations (for instance if this method is itself defined by the associations). It can be modified via the Method change action.
It corresponds to the digressivity factor which is applied for the French declining depreciation method. It can be equal to:
- 1.25
- 1.50
- 1.75
- 2
Depreciation end date
It depends on the prorata temporis type:
- If the prorata temporis = ½ year:
Depreciation start date = 1st day of the month of the start date of the fiscal year that follows the acquisition fiscal year+ (Depreciation duration – 0,5)
The result is the last day of a month.
- If the prorata temporis = Month:
Depreciation end date = 1st day of the month of the depreciation start date + Depreciation duration
The result is the last day of a month. - If the prorata temporis = ½ month:
Depreciation end date =
1st day of the month of the depreciation start date + Depreciation duration + 0.5 months
The result is the 15th day of a month. - If the prorata temporis = ½ quarter:
Depreciation end date =
1st day of the quarter of the depreciation start date + Depreciation duration + 0.5 quarter
The result is the middle of a quarter.
Calculation examples of depreciation end dates:
Start date | Duration | End date |
01/01/2005 | 3 years and ½ year | 30/06/2008 |
14/10/2005 | 3.25 and ½ year | 30/09/2008 |
01/01/2005 | 5.33 and Month | 30/04/2010 |
01/01/2005 | 3 and ½ month | 15/01/2008 |
08/11/2005 | 3.25 and ½ month | 15/02/2009 |
01/01/2005 | 3 et ½ trimestre | 15/02/2008 |
08/12/2005 | 3 et ½ trimestre | 15/11/2008 |
Prorata temporis
The type of prorata temporis can be specified by the user or defined by the associations if the depreciation method is itself defined by the associations. It can be modified via the Method change action.
The possible values are the following:
- Prorata = Month (Month)
- Prorata = ½ month (Mid-Month)
- Prorata = ½ quarter (Mid-Quarter)
- Prorata = ½ year (Half-Year)
Depreciation charge
The charge is equal to the largest of the 2 following values:
- Net depreciable value * Depreciation rate * prorata temporis
- Net depreciable value * ( Holding duration in the fiscal year / Rsidual depreciation duration)
Notes:
- Net depreciable value = (Net value – Residual value)
- Residual depreciation duration = length of the interval [fiscal year start date - fiscal year end date]
- If the Depreciation end date is equal to the Fiscal year end date and if the asset is not issued before this depreciation end date, then the Fiscal year charge = Net depreciable value.
- If the Net depreciable value is larger than 0, and the residual depreciation duration is equal to 0 (case where Depreciation end date < Fiscal year start date), then Fiscal year charge = Net depreciable value so as to close the depreciation.
The charge of the disinvestment fiscal year is calculated based on the type of prorata temporis:
- If Prorata = ½ year, the charge of the disinvestment fiscal year corresponds to the fiscal year charge * 50 %.
This applies even in the case where the asset is issued during the fiscal year of the depreciation end.
Ditto if the disinvestment fiscal year differs from 12 months. - If Prorata = Month, the charge is calculated until the end of the month that precedes the disposal month, or until the disposal date if this corresponds to the last day of the month.
- If Prorata = ½ month, the charge is calculated until the middle of the disposal month: there is therefore a ½ charge for the disposal month.
- If Prorata = ½ quarter, the charge of the disinvestment fiscal year corresponds to the fiscal year charge * a percentage that depends on the quarter of disposal of the fiscal year.
- 12.50% (1 ½ quarter / 8) if the Disposal date is in the 1st quarter
- 37.50% (3 ½ quarter / 8) if the Disposal date is in the 2nd quarter
- 62.50% (5 ½ quarter / 8) if the Disposal date is in the 3rd quarter
- 87.50% (7 ½ quarter / 8) if the Disposal date is in the 4th quarter
This rule can be modified by Disposal rules: Previous fiscal year end issue and Current fiscal year end issue.
If the method is changed during the fiscal year (revision of the duration, the acceleration coefficient, the prorata type, or the depreciation start date), the change is systematically effective at fiscal year start: the fiscal year charge is therefore re-calculated with the new method.
Distribution of the fiscal year charge on the periods
If the fiscal year is divided into several periods, the fiscal year charge is distributed over these periods. This distribution is applied according to the following rule:
- Prorata temporis = ½ year or month. In this case, the holding period starts on the 1st day of the month of the depreciation start date.
Period Charge = Fiscal year charge
*( Σ p1 to pc (Number of holding months in the period )
/ Σ p1 to pf (Number of holding months in the period ) )
- Depreciation total of previous periods - Prorata temporis 2 = ½ month or ½ quarter. In this case, the holding period starts:
- either in the middle of the month of the depreciation start date, if Prorata = ½ month,
- or in the middle of the quarter (that is, the middle of the 2nd month of the quarter) in which the depreciation start date is set, if Prorata = ½ quarter.
Period Charge = Fiscal year charge
*( Σ p1 to pc (Number of holding ½ months in the period )
/ Σ p1 to pf (Number of holding ½ months in the period ) )
- Depreciation total of previous periods
p1 to pc = from the 1st holding period in the fiscal year to the current period included (1)
p1 to pf = from the 1st holding period in the fiscal year to the last holding period in the fiscal year
(1) Unless the asset is issued in the fiscal year before this current period or if it is completely depreciated in the fiscal year before this current period. The period retained is thus the minimum period among the 3 following ones:
- period of depreciation end if the Depreciation end date belongs to the interval [period start – period end]
- disposal period if the Disposal date belongs to the interval [period start – period end]
- current period
For this depreciation method, the period weight is not taken into account.
Examples:
1st example
- Gross value: 10,000
- Residual value: 0
- Depreciation start date: 03/04/2006
- Acceleration coefficient: 2
- Depreciation duration: 5 years --> Rate: (1/5) * 2 = 40%
- Type of prorata temporis: ½ year
The Depreciation end date determined by Sage X3 is: 30/06/2011
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2006 – 31/12/2006 | 10,000.00 | (1) 2,000.00 | 2,000.00 |
01/01/2007 – 31/12/2007 | 8,000.00 | (2) 3,200.00 | 5,200.00 |
01/01/2008 – 31/12/2008 | 4,800.00 | (3) 1,920.00 | 7,120.00 |
01/01/2009 – 31/12/2009 | 2,880.00 | (4) 1,152.00 | 8,272.00 |
01/01/2010 – 31/12/2010 | 1,728.00 | (5) 1,152.00 | 9,424.00 |
01/01/2011 – 31/12/2011 | 576 ,00 | (6) 576.00 | 10,000.00 |
(1) 10,000.00 * 40% * 50% ou 6/12 = 2,000.00
(2) 8,000.00 * 40% = 3,200.00
(3) 4,800.00 * 40% = 1,920.00
(4) 2,880.00 * 40% = 1,152.00 (equal to 2,880.00 * 12 / 30 = 1,152.00)
(5) 1,728.00 * 12 / 18 = 1,152.00 since > than 1,728.00 * 40% = 691,20
(6) 576.00 * 6 / 6 = 576.00
If this asset is issued in 2010, regardless of the disposal date:
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2010 – 31/12/2010 | 1,728.00 | (7) 576.00 | 8,848.00 |
(7) 1,728.00 * 12 / 18 = 1,152.00 * 50% or 6/12 = 576.00 (50% or 6/12 since a ½ charge for the disposal fiscal year).
If this asset is issued in 2011, regardless of the disposal date:
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2011 – 31/12/2011 | 576 ,00 | (7) 288.00 | 9,712.00 |
(7) 576.00 * 6 / 6 = 576.00 * 50% = 288.00 (50% since a ½ charge for the disposal fiscal year)
1st example (continuing):
Depreciation plan in the case where the fiscal years are divided into quarters
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2006 – 31/12/2006 Quarter 1 Quarter 2 Quarter 3 Quarter 4 | 10,000.00 | 2,000.00 0.00 (1) 666.67 (2) 666.66 (3) 666.67 | 2,000.00 |
01/01/2007 – 31/12/2007 Quarter 1 Quarter 2 Quarter 3 Quarter 4 | 8,000.00 | 3,200.00 800.00 800.00 800.00 800.00 | 5,200.00 |
01/01/2008 – 31/12/2008 | 4,800.00 | 1,920.00 | 7,120.00 |
01/01/2009 – 31/12/2009 | 2,880.00 | 1,152.00 | 8,272.00 |
01/01/2010 – 31/12/2010 | 1,728.00 | 1,152.00 | 9,424.00 |
01/01/2011 – 31/12/2011 Quarter 1 Quarter 2 Quarter 3 Quarter 4 | 576,00 | 576.00 (4) 288.00 (5) 288.00 0.00 0.00 | 10,000.00 |
(1) 2,000.00 * 3/9 = 666.67 ( 3/9 since 3 holding months for this quarter )
(2) 2,000.00 * 6/9 = 1,333.33 – 666.67= 666.66
(3) 2,000.00 * 9/9 = 2,000.00 – 1,333.33 = 666.67
(4) 576.00 * 3/6 = 288.00
(5) 576.00 * 6/6 = 576.00 – 288.00 = 288.00
If the fiscal year had been divided into months (monthly stops), the distribution of the fiscal year charge would have been done in the same manner, that is, by applying a holding prorata in months. The 1st charge would therefore have been recorded in 04/2006.
2nd example
- Gross value: 10,000
- Residual value: 0
- Depreciation start date: 03/04/2006
- Acceleration coefficient: 1.5
- Depreciation duration: 3 years --> Rate: (1/3) * 1.5 = 50%
- Type of prorata temporis: ½ quarter
The Depreciation end date determined by Sage X3 is: 15/05/2009
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2006 – 31/12/2006 | 10,000.00 | (1) 3,125.00 | 3,125.00 |
01/01/2007 – 31/12/2007 | 6,875.00 | (2) 3,437.50 | 6,562.50 |
01/01/2008 – 31/12/2008 | 3,437.50 | (3) 2,500.00 | 9,062.50 |
01/01/2009 – 31/12/2009 | 937.50 | (4) 937.50 | 10,000.00 |
(1) 10,000.00 * 50% * 5/8 = 3,125.00 ( 5/8 = 5 ½ holding quarters out of 8 )
(2) 6,875.00 * 50% = 3,437.50
(3) 3,437.50 * 8/11 = 2,500.00 since > than 3,437.50 * 50% = 1,718.75
(4) 937.50 * 3/3 = 937.50
If this asset is issued in the 1st quarter of 2008, regardless of the disposal date in this quarter:
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2008 – 31/12/2008 | 3,437.50 | (5) 312.50 | 6,875.00 |
(5) 3,437.50 * 8/11 = 2,500.00 * 12.50% = 312.50 (12.50% = 1 ½ quarter / 8 ½ quarter)
If this asset is issued in the 3rd quarter of 2009, regardless of the disposal date in this quarter:
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2009 – 31/12/2009 | 937.50 | (6) 585.94 | 9,648.44 |
(6) 937.50 * 3/3 = 937.50 * 62.5% = 585.94 (62.5% = 5 ½ quarter / 8 ½ quarter)
2nd example (continuing):
Depreciation plan in the case where the fiscal years are divided into quarters
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2006 – 31/12/2006 Quarter 1 Quarter 2 Quarter 3 Quarter 4 | 10,000.00 | 3,125.00 0.00 (1) 625.00 (2) 1,250.00 (3) 1,250.00 | 3,125.00 |
01/01/2007 – 31/12/2007 | 6,875.00 | 3,437.50 | 6,562.50 |
01/01/2008 – 31/12/2008 | 3,437.50 | 2,500.00 | 9,062.50 |
01/01/2009 – 31/12/2009 Quarter 1 Quarter 2 Quarter 3 Quarter 4 | 937.50 | 937.50 (4) 625.00 (5) 312.50 0.00 0.00 | 10,000.00 |
(1) 3,125.00 * 3/15 = 625.00 ( 3/15 since 3 ½ holding months for this quarter )
(2) 3,125.00 * 9/15 = 1,875.00 – 625.00 = 1,250.00
(3) 3,125.00 * 15/15 = 3,125.00 – 1,875.00 = 1,250.00
(4) 937.50 * 6/9 = 625.00 ( 6/9 since 6 ½ holding months for this quarter and 9 ½ months remaining until the depreciation end date )
(5) 937.50 * 9/9 = 937.50 – 625.00 = 312.50
If the fiscal year had been divided into months (monthly stops), the distribution of the fiscal year charge would have been done in the same manner, that is, by applying a holding prorata in ½ months:
- 05/2006 = 3,125.00 * 1/15 = 208.33
- 06/2006 = 3,125.00 * 3/15 = 625.00 – 208.33 = 416.67
- …
3rd example
- Gross value: 10,000
- Residual value: 0
- Depreciation start date: 03/04/2006
- Acceleration coefficient: 1.5
- Depreciation duration: 3 years --> Rate: (1/3) * 1.5 = 50%
- Type of prorata temporis: ½ month
The Depreciation end date determined by Sage X3 is: 15/04/2009
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2006 – 31/12/2006 | 10,000.00 | (1) 3,541.67 | 3,541.67 |
01/01/2007 – 31/12/2007 | 6,458.33 | (2) 3,229.17 | 6,770.84 |
01/01/2008 – 31/12/2008 | 3,229.16 | (3) 2,499.99 | 9,270.83 |
01/01/2009 – 31/12/2009 | 729.17 | (4) 729.17 | 10,000.00 |
(1) 10,000.00 * 50% * 17/24 = 3,541.67 (17/24 = 17 ½ holding months out of 24 )
(2) 6,458.33 * 50% = 3,229.17
(3) 3,229.16 * 24/31 = 2,499.99 since > than 3,229.16 * 50% = 1,614.58
(4) 729.17 * 7/7 = 729.17
If this asset has been issued on 24/03/2008:
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2008 – 31/12/2008 | 3,229.16 | (5) 520.83 | 7,291.67 |
(5) 3,229.16 * 5/31 = 520.83 (5/31 = 5 ½ holding months in 2008)
If this asset has been issued on 7/14/2009:
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2009 – 31/12/2009 | 729.17 | (6) 729.17 | 10,000.00 |
(6) Disposal date 14/07/2009 > Depreciation end date 15/04/2009. Therefore there is no prorata temporis to apply due to the disposal.
3rd example (continuing):
Depreciation plan in the case where the fiscal years are divided into quarters
Fiscal year | Net depreciable value | Fiscal year charge | Fiscal year total |
01/01/2006 – 31/12/2006 Quarter 1 Quarter 2 Quarter 3 Quarter 4 | 10,000.00 | 3,541.67 0.00 (1) 1,041.67 (2) 1,250.00 (3) 1,250.00 | 3,541.67 |
01/01/2007 – 31/12/2007 | 6,458.33 | 3,229.17 | 6,770.84 |
01/01/2008 – 31/12/2008 | 3,229.16 | 2,499.99 | 9,270.83 |
01/01/2009 – 31/12/2009 Quarter 1 Quarter 2 Quarter 3 Quarter 4 | 729.17 | 729.17 (4) 625.00 (5) 104.17 0.00 0.00 | 10,000.00 |
(1) 3,541.67 * 5/15 = 1,041.67 ( 5/17 since 5 ½ holding months for this quarter )
(2) 3,541.67 * 11/17 = 2,291.67 – 1,041.67 = 1,250.00
(3) 3,541.67 * 17/17 = 3,541.67 – 2,291.67 = 1,250.00
(4) 729.17 * 6/7 = 625.00 (6/7 since 6 ½ holding months for this quarter)
(5) 729.17 * 7/7 = 729.17 – 625.00 = 104.17
If the fiscal year had been divided into months (monthly stops), the distribution of the fiscal year charge would have been done in the same manner, that is, by applying a holding prorata in ½ months: