When you set up a fixed asset depreciation profile and select the value in the field on the form, the depreciation of fixed assets that are assigned this depreciation profile is by the same percentage in each depreciation period. The percentage will be calculated based on the service life of the asset. For example, if an asset has a service life of five years, the percentage will be calculated as 40% (200%/5).
To set up 200% reducing balance depreciation, you also make must selections in two fields on the tab of the form. First, you make a selection in the field. Depending on your selection, different options appear in the field, as explained below.
This method is also known as double declining balance.
Selection of
depreciation year
You can select either or in the field on the form. Your selection defines the options that are available in the field.
Calendar
You can choose to keep the default value in the field, .
The option updates the depreciation base (typically net book value minus scrap value) on January 1 each year. In the examples below, the depreciation base is the numerator in the first expression in calculations in the Calculation column.
If you select , you have four options in the field, which defines the depreciation accrual posting dates and amounts throughout the calendar year:
-
, posts December 31
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posts a monthly amount at the end of each calendar month
-
posts a quarterly amount at the end of each calendar quarterly (March 32, June 30, September 30, and December 31
-
posts a half yearly amount at the calendar half year (June 30 and December 31)
If the Thailand country/region configuration key and the Daily depreciation configuration key are both selected, the option also is available. The depreciation amount for the daily depreciation method is posted using one transaction for each day.
Fiscal
The second option that you can select in the field is . If you select this option, the 200% reducing balance depreciation is calculated on the basis of the fiscal year, which is set up in the form.
For example, for fiscal year March 15, 2006 - March 14, 2007, the depreciation calculation starts on March 15. The fiscal year can be longer or shorter than 12 months. The depreciation automatically is adjusted for each fiscal period, and the length of the next fiscal year is found automatically from the setup of fiscal periods in the form or the asset calendar is associated to the value model/depreciation book.
When is selected as the depreciation year, two options are available for the setup of :
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The total amount of the depreciation calculated for the fiscal year is posted as one amount on the last date of the fiscal year.
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The total amount of the depreciation calculated for the fiscal year is accrued into the fiscal periods that are defined in the form or asset calendar for each fiscal year.
Example of
200% reducing balance depreciation
The method will divide 200% by the service life years. That percentage will be multiplied by the net book value of the asset to determine the depreciation amount for the year.
Fixed asset acquisition price: 11,000; salvage value: 1,000; service life: 5; depreciation percentage: 40 (200%/5).
|
Period |
Calculation of yearly depreciation amount |
Book value |
Net book value at the end of the year |
|---|---|---|---|
|
Year 1 |
(11,000-1,000) * 40% = 4,000 |
7,000 (11,000 - 4,000) |
6,000 (11,000 - 1,000 - 4,000) |
|
Year 2 |
6,000 * 40% = 2,400 |
4,600 (7,000 - 2,400) |
3,600 (6,000 - 2,400) |
|
Year 3 |
3,600 * 40% = 1,440 |
3,160 (4,600 - 1,440) |
2,160 (3,600 - 1,440) |
|
and so forth |
Note
|
|---|
|
When the 200% reducing balance depreciation amount becomes less than what would have occurred using the straight-line method, there is generally a conversion to straight-line for the remaining life. |
