Low value pool depreciation is a reducing balance depreciation method used in Australia. You can allocate assets to a low value pool if they are either low cost assets or low value assets with a cost or opening adjustable value of less than a specified amount. There are three low value types.
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A low cost asset has an opening net book value that is less than a set amount, after GST credits or adjustments.
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A low value asset is not a low cost asset, and it has a net book value of less than a set amount.
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A second element cost is an acquisition adjustment to a low value pool. The cost must be less than the set amount.
A low value pool is created when a low cost or low value asset is created in or transferred into a low value pool.
You can use the low value pool depreciation method in the form if the configuration key for Australia is selected for your company. It is assumed that your company is using Australian dollars as the functional currency.
Low value
pool depreciation profile
To use the low value pool depreciation method, you must enter information in the following fields on the tab in the form:
Example
Suppose you enter the following information in the form.
|
Field |
Value |
|---|---|
|
|
$1000 |
|
|
18.75% |
|
|
37.5% |
If you have a low cost asset with a net book value of $800, the first-year depreciation for the asset will be 18.75% of the $800, or $150. The depreciation amount for the second year will be 37.5% of the net book value ($800 - $150 = $650), or $243.75.
If you have a low value asset with a net book value of $800, the first year the asset is depreciated using the low value pool method, the depreciation will be 37.5% of the $800, or $300. The depreciation amount for the second year will also be 37.5% of the net book value ($800 - $300 = $500), or $187.50.
|
Depreciation year |
Low cost asset |
Low value asset |
|---|---|---|
|
First year using low value pool depreciation method |
18.75% ($150) |
37.5% or $300 |
|
Second year |
37.5% ($243.75) |
37.5% or $187.50 |
