The proportional depreciation/component balance method is based on the assumption that all revaluations are proportionate to the original value of a component without regard to its acquisition date.
For every component that is removed from a fixed asset composed of warehouse components, the balance value of the component is calculated using the following formula:
S j= S balx (S j, PIO/S PIO), where,
S j, PIO= the initial value of the withdrawn components.
S bal= the fixed asset balance value, which is determined as the sum of acquisition transactions, revaluation transactions, major refurbishment, and partial take-down transactions. Partial take-down transactions are listed with the " -" sign and are automatically deducted from the total.
S PIO= the initial fixed asset cost.
The accumulated depreciation for the components is calculated in the same way as the original value:
A j= A balx (S j, PIO/S PIO)
Where A bal= the fixed asset balance value depreciation, which is determined as the sum of all transactions calculating fixed asset depreciation, fixed asset depreciation revaluation transactions, and partial take-down transactions, as they relate to depreciation. The calculated value is rounded off in accordance with the configurations of the fixed asset module.
The component depreciated cost is calculated as the difference between the component balance value and the accumulated component depreciation.
The following table shows an example of a component balance value calculation.
|
Transaction number |
Operation |
Amount |
Comments |
|---|---|---|---|
|
1 |
Acquisition |
1000 |
The fixed asset is completed with Item 1 and acquired. |
|
2 |
Acquisition |
2000 |
The fixed asset is completed with Item 2 and acquired. |
|
3 |
Cost revaluation 1 |
1500 |
Fixed asset revalued. |
|
4 |
Depreciation |
300 |
Fixed asset depreciation calculated. |
|
5 |
Acquisition |
2500 |
The fixed asset is completed with Item 3 and acquired. |
|
6 |
Depreciation |
700 |
Fixed asset depreciation calculated. |
|
7 |
Disassembly |
Xxx* |
Item 1 component is withdrawn from the fixed asset composition. |
|
8 |
Cost revaluation 2 |
2000 |
Fixed asset revalued. |
|
9 |
Depreciation revaluation |
349.21 |
Depreciation revalued. |
At the time of partial disassembly in transaction 7, the figures were as follows:
-
The fixed asset balance value is 1000 + 2000 + 1500 + 2500 =7000.
-
The original cost was 1000 + 2000 + 2500 = 5500.
-
The fixed asset balance depreciation was 1000.
Therefore, the balance value of component Item 1 is calculated as 7000 * 1000 / 5500 = 1272.73, and the accumulated depreciation for component Item 1 is 1000 * 1000 / 5500 = 181.82.
After completing transactions 1-7, the balance value of the component was:
-
Item 1 = 1272.73 (The component was disposed with the specified original cost.)
-
Item 2 = 2545.45
-
Item 3 = 3181.82
The accumulated component depreciation was:
-
Item 1 = 181.82 (The component was disposed with the specified accumulated depreciation.)
-
Item 2 = 363.64
-
Item 3 = 454.54
After completing transactions 1-9, the fixed asset balance value is:
-
1000 + 2000 + 1500 + 2500 + 2000 – 1272.73 = 7727.27
-
The accumulated fixed asset depreciation is 700 + 300 + 349.21 – 181.82 = 1167.39
-
The original cost is 2000 + 2500 (At the time of calculation, the fixed asset consists of component Item 2 and Item 3 only.):
-
Item 2 = 7727.27 * 2000 / (2000 + 2500)* = 3434.34
-
Item 3 = 7727.27 * 2500 / (2000 + 2500)* = 4292.93
-
-
Accumulated component depreciation:
-
Item 2 = 1167.39 * 2000 / (2000 + 2500)* = 518.84
-
Item 3 = 1167.39 * 2500 / (2000 + 2500)* = 648.55
-
