A fixed asset has an acquisition cost of LCY 100,000. In the FA Depreciation Books window, the Declining-Balance % field contains 25 and the No. of Depreciation Years field contains 8. The Calculate Depreciation batch job is run biannually.
The FA ledger entries look like this:
| Date | FA Posting Type | Days | Amount | Book Value |
|---|---|---|---|---|
01/01/00 | Acquisition Costs | * | 100,000.00 | 100,000.00 |
06/30/00 | Depreciation | 180 | -12,500.00 | 87,500.00 |
12/31/00 | Depreciation | 180 | -12,500.00 | 75,000.00 |
06/30/01 | Depreciation | 180 | -9,375.00 | 65,625.00 |
12/31/01 | Depreciation | 180 | -9,375.00 | 56,250.00 |
06/30/02 | Depreciation | 180 | -7,031.25 | 49,218.75 |
12/31/02 | Depreciation | 180 | -7,031.25 | 42,187.50 |
06/30/03 | Depreciation | 180 | -5,273.44 | 36,914.06 |
12/31/03 | Depreciation | 180 | -5,273.44 | 31,640.62 |
06/30/04 | Depreciation | 180 | -3,955.08 | 27,685.54 |
12/31/04 | Depreciation | 180 | -3,955.08 | 23,730.46 |
06/30/05 | Depreciation | 180 | -3,955.08 | 19,775.38 SL |
12/31/05 | Depreciation | 180 | -3,955.08 | 15,820.30 SL |
06/30/06 | Depreciation | 180 | -3,955.08 | 11,865.22 SL |
12/31/06 | Depreciation | 180 | -3,955.07 | 7,910.15 SL |
06/30/07 | Depreciation | 180 | -3,955.08 | 3,955.07 SL |
12/31/07 | Depreciation | 180 | -3,955.07 | 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: 25% of 100,000 = 25,000=12,500+12,500
Straight-line amount = 100,000/8=12,500=6,250+6,250
The declining-balance amount is used because it is the greater amount.
6th year (2005):
Declining-balance amount: 25% of 23,730.46 = 4,943.85= 2,471.92+2,471.92
Straight-line amount = 23,730.46/3 = 7,910.15=3,995.07+3,995.08
The straight-line amount is used because it is the greater amount.