Depreciation Calculation Example 9
Asset acquired in middle of accounting period using Date of Purchase basis. Date of Purchase method based on Days.
System-Wide Configuration: Spread "Catch-Up' among Remaining Periods in Purchase Year
| "Date of Purchase" Config: | Actual # Days in each Purchase Year Period |
| FY: | Calendar Year (January to December) |
| New Asset: | Acquired July 1, 2000 |
| Start Date: | July 15, 2000 |
| Cost: | $ 12,000 |
| Depr Method: | DDB2, Date of Purchase Basis |
| Annual Depr: | (Year 1) 12,000 * 75% = 9,000 |
| (Year 2) 12,000 * 25% = 3,000 | |
| Current FY/Pd: | FY: 2000 Pd: 07 |
| Depr Yr/Days Remaining: (at time of initialization) | Depr Yr: 1 Days Remaining in PY: 365 |
In this example, the system-wide default configuration on the Configure Fixed Assets Settings screen has been used to "Catch-Up" any missed depreciation in the remaining periods of the purchase year. No periods are missed for this example, so there is no "Catch-Up" amount computed for any period.
The Date of Purchase configuration for this example has been changed from the default to use the actual number of days in each purchase year period. When this configuration option is selected, the Depr Start Date field on the G/L Book Info tab and Other Books Info subtask of the Manage Asset Master Information screen determines how many days will be used in the computation for the first accounting period in the first purchase year. Because the Depr Start Date for this example is the 15th day of the accounting period in the first purchase year, there are only 17 days "owned" (31 minus 14) for the first accounting period.
| Dates | No Days | FY | FY Pd |
|---|---|---|---|
| Jul 15 - Jul 31, 2000 | 17 | 00 | 7 |
| Aug 1 - Aug 31, 2000 | 31 | 00 | 8 |
| Sep 1 - Sep 30, 2000 | 30 | 00 | 9 |
| Oct 1 - Oct 31, 2000 | 31 | 00 | 10 |
| Nov 1 - Nov 30, 2000 | 30 | 00 | 11 |
| Dec 1 - Dec 31, 2000 | 31 | 00 | 12 |
| Jan 1 - Jan 31, 2001 | 31 | 01 | 1 |
| Feb 1 - Feb 28, 2001 | 28 | 01 | 2 |
| Mar 1 - Mar 31, 2001 | 31 | 01 | 3 |
| Apr 1 - Apr 30, 2001 | 30 | 01 | 4 |
| May 1 - May 31, 2001 | 31 | 01 | 5 |
| Jun 1 - Jun 30, 2001 | 30 | 01 | 6 |
| Jul 1 - Jul 14, 2001 | 14 | 01 | 7 |
| 365 |
End of Purchase Year 1- Begin Purchase Year 2
Seventeen days in FY01 Pd are calculated using the Year 2 depreciation percentage, because this represents the number of days in Purchase year 2 that are "owned" by this accounting period (FY 01, Period 7). Purchase Year 2 begins July 15, 2001 and ends July 14, 2002.
| Dates | No Days | FY | FY Pd |
|---|---|---|---|
| Aug 1 - Aug 31, 2001 | 31 | 01 | 8 |
| Sep 1 - Sep 30, 2001 | 30 | 01 | 9 |
| Oct 1 - Oct 31, 2001 | 31 | 01 | 10 |
| Nov 1 - Nov 30, 2001 | 30 | 01 | 11 |
| Dec 1 - Dec 31, 2001 | 31 | 01 | 12 |
| Jan 1 - Jan 31, 2002 | 31 | 02 | 1 |
| Feb 1 - Feb 28, 2002 | 28 | 02 | 2 |
| Mar 1 - Mar 31, 2002 | 31 | 02 | 3 |
| Apr 1 - Apr 30, 2002 | 30 | 02 | 4 |
| May 1 - May 31,2002 | 31 | 02 | 5 |
| Jun 1 - Jun 30, 2002 | 30 | 02 | 6 |
| Jul 1 - Jul 14, 2002 | 14 | 02 | 7 |
| 365 |
Basic Formula
| (Annual Depr - PYTD Depr) * # Days in Curr Pd
# Days Remaining in PY (Including Current Pd) |
= Current Pd Depreciation | ||
|---|---|---|---|
| FY00 Pd 7: (9,000.00 - 0.00) = | 9,000.00 * 17
365 |
= | 419.18 |
| FY00 Pd 8: (9,000.00 - 419.18) = | 8,580.82 * 31
348 |
= | 764.38 |
| FY00 Pd 9: (9,000.00 - 1,183.56) = | 7,816.44 * 30
317 |
= | 739.73 |
| FY00 Pd 10: (9,000.00 - 1,923.29) = | 7,076.71 * 31
287 |
= | 764.38 |
| FY00 Pd 11: (9,000.00 - 2,687.67 = | 6,312.33 * 30
256 |
= | 739.73 |
| FY00 Pd 12: (9,000.00 - 3,427.40) = | 5,572.60 * 31
226 |
= | 764.38 |
| FY01 Pd 1: (9,000.00 - 4,191.78) = | 4,808.22 * 31
195 |
= | 764.38 |
| FY01 Pd 2: (9,000.00 - 4,953.16) = | 4,043.84 *28
164 |
= | 690.41 |
| FY01 Pd 3: (9,000.00 - 5,646.57) = | 3,353.43 * 31
136 |
= | 764.38 |
| FY01 Pd 4: (9,000.00 - 6,410.95) = | 2,589.05 * 30
105 |
= | 739.73 |
| FY01 Pd 5: (9,000.00 - 7,150.68) = | 1,849.32 *31
75 |
= | 764.39 |
| FY01 Pd 6: (9,000.00 - 7,915.07) = | 1,084.93 * 30
44 |
= | 739.72 |
For each year in the life of the asset, the accounting period in which the Depr Start Date anniversary falls affects the depreciation calculation. The system applies the previous depreciation year rate to the applicable number of days "owned" in the previous purchase year and applies the current depreciation year rate to the number of days "owned" in the current depreciation year. These two calculations are summed to derive the total depreciation for the current period.
1st 14 days (July 1, 2001 - July 14, 2001)
| (Annual Depr - PYTD Depr) * # Days in Curr Pd
# Days Remaining in PY (Including Current Pd) |
= Current Pd Depreciation | ||
|---|---|---|---|
| FY01 Pd 7: (9,000.00 - 8,654.79) = | 345.21 * 14
14 |
= | 345.21 |
Begin Purchase Year 2
Next 17 days (July 15, 2001 - July 31, 2001)
| (Annual Depr - PYTD Depr) * # Days in Curr Pd
# Days Remaining in PY (Including Current Pd) |
= Current Pd Depreciation | ||
|---|---|---|---|
| FY01 Pd 7: (3,000.00 - 0.00) = | 3,000.00 * 17
365 |
= | 139.73 |
| PERIOD 7 TOTAL | 484.94 | ||
| FY01 Pd 8: (3,000.00 - 139.73) = | 2,860.27 * 31
348 |
= | 254.79 |
| FY01 Pd 9: (3,000.00 - 394.52) = | 2,605.48 * 30
317 |
= | 246.58 |
| FY01 Pd 10: (3,000.00 - 641.10) = | 2,358.90 * 31
287 |
= | 254.79 |
| FY01 Pd 11: (3,000.00 - 895.89) = | 2,104.11 * 30
256 |
= | 246.58 |
| FY01 Pd 12: (3,000.00 - 1,142.47) = | 1,857.53 * 31
226 |
= | 254.79 |
| FY02 Pd 1: (3,000.00 - 1,397.26) = | 1,602.74 * 31
195 |
= | 254.79 |
| FY02 Pd 2: (3,000.00 - 1,652.05) = | 1,347.95 * 28
164 |
= | 230.14 |
| FY02 Pd 3: (3,000.00 - 1,882.19) = | 1,117.81 * 31
136 |
= | 254.79 |
| FY02 Pd 4: (3,000.00 - 2,136.98) = | 863.02 * 30
105 |
= | 246.58 |
| FY02 Pd 5: (3,000.00 - 2,383.56) = | 616.44 * 31
75 |
= | 254.80 |
| FY02 Pd 6: (3,000.00 - 2,638.36) = | 361.64 * 30
44 |
= | 246.57 |
In this example, in which the Depr Start Date does not coincide with the beginning of an accounting period and a Date of Purchase configuration based on Days is selected, a residual number of days will always be left over when the "official" life (in terms of accounting periods) is complete.
In this example, there is a two-year life consisting of 24 accounting periods. In the 24th accounting period, however, there are still 14 residual days remaining that have not been depreciated.
If you should browse this Asset Master record at this time, the Current Depr Yr field will display "2" and the Pds/Days Remaining field will display "14." The system will not display a value in the Current Depr Yr field that is greater than the life of the asset, even though the residual depreciation extends into the next accounting period.
In this circumstance, the number of accounting periods over which the asset is depreciated is 25 rather than 24, to accommodate the prorated portion that was excluded from the first purchase period.
Residual Amount:
14 days (July 1, 2002 - July 14, 2002)
| (Annual Depr - PYTD Depr) * # Days in Curr Pd
# Days Remaining in PY (Including Current Pd) |
= Current Pd Depreciation | ||
|---|---|---|---|
| FY02 Pd 7: (3,000.00 - 2,884.93) = | 115.07 * 14
14 |
= | 115.07 |