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You can set up a default limit for each asset category, book, and range of dates in service in the Asset Categories window. See: Entering Default Depreciation Rules for a Category.
For assets using a straight-line depreciation method, you can use the Set Extended Life window to control the amount of depreciation expense taken for each period. If you do not specify an extended life in years, Oracle Assets continues to depreciate the asset at the same rate it depreciated during the last fiscal year of the asset's normal useful life.
Recoverable Cost = Cost - Default Depreciation Limit
For example, an asset cost of 100,000 yen with a depreciation limit of 1 yen has a recoverable cost of 100,000 - 1 = 99,999 yen.
When you add an asset for which you set up a default depreciation limit percentage, Oracle Assets calculates the recoverable cost using the following formula:
Recoverable Cost = Cost X Default Depreciation Limit
For example, an asset cost of 100,000 yen with a depreciation limit of 95% has a recoverable cost of 100,000 X 95% = 95,000 yen.
If you add the asset using Detail Additions, Oracle Assets shows the recoverable cost in the Books window. You can override this value if necessary. If you add the asset using QuickAdditions or Mass Additions, Oracle Assets automatically calculates the recoverable cost for the asset. You can adjust the recoverable cost at any time during the normal useful life of the asset. This does not affect the depreciation expense during the normal useful life, unless the recoverable cost is less than the cost less the salvage value.
Note: You cannot adjust the recoverable cost for assets that do not depreciate using the special depreciation limits. For these assets, the recoverable cost must equal (cost - salvage value).
Depreciation per period =
min ( (recoverable cost - life-to-date depreciation),
(cost - salvage value) / life in periods) )
For assets using a straight-line depreciation method, you can control the depreciation expense taken per period in the extended life. To do this, specify the length of the extended life in years in the Set Extended Life window.
Depreciation per period =
1 Salvage Value
_____________ x ___________________
# periods/year Extended Life (years)
Year of Life | Annual Depreciation (Yen) | Accumulated Depreciation (Yen) |
1 | 9000 | 9000 |
2 | 9000 | 18,000 |
: | : | : |
9 | 9000 | 81,000 |
10 | 9000 | 90,000 = (cost - salvage value) |
11 | 9000 = less of (9000, 9999) | 99,000 |
12 | 999 = less of (9000, 999) | 99,999 |
Table 1 - 16. (Page 1 of 1) |
For the first ten years, Oracle Assets takes an annual depreciation expense of (100,000 - 10,000) / 10 = 9000 yen. If there are four periods per year and you are dividing depreciation evenly, Oracle Assets takes a depreciation expense of 2250 yen per period.
In the 11th year, depreciation expense is also 9000 yen for the year, or 2250 yen per period.
In the 12th year, the depreciation expense is 999 yen. Thus Oracle Assets fully reserves the asset in the first period of this year. Note that in the final year, Oracle Assets does not divide the remaining recoverable cost evenly among the periods in the fiscal year. The depreciation expense per period remains the same in all but the last period of life, when it is equal to the amount necessary to fully reserve the asset.
Year of Life | Annual Depreciation (Yen) | Accumulated Depreciation (Yen) |
1 | 90,000 | 90,000 |
2 | 90,000 | 180,000 |
3 | 90,000 | 270,000 |
4 | 90,000 | 360,000 |
5 | 90,000 | 450,000 = (cost - salvage value) |
6 | 25,000 | 475,000 |
Table 1 - 17. (Page 1 of 1) |
For the first five years, Oracle Assets takes an annual depreciation expense of (500,000 - 50,000) / 5 = 90,000 yen. If there are 12 periods per year and you divide depreciation evenly, Oracle Assets takes depreciation expense of 7500 yen per period.
In the sixth year, the depreciation expense is 25,000 yen for the year. Depreciation expense is 7500 yen per month for the first three months, and 2500 yen in the fourth month.
The depreciation over the useful life of the asset would be as follows:
Year | Cost (Won) | Salvage Value | Deprn Basis | Annual Deprn. | NBV |
---|---|---|---|---|---|
1 | 4,000,000 | 400,000 | 3,600,000 | 900,000 | 3,100,000 |
2 | 4,000,000 | 400,000 | 3,600,000 | 900,000 | 2,200,000 |
3 | 4,000,000 | 400,000 | 3,600,000 | 900,000 | 1,300,000 |
4 | 4,000,000 | 400,000 | 3,600,000 | 900,000 | 400,000 |
Table 1 - 18. (Page 1 of 1) |
When the asset has completed its useful life, you query the asset in the Set Extended Life window. You enter the number of years to depreciate the salvage value, for example, three years.
The depreciation over the extended life of the asset would be as follows:
Year | Cost (Won) | Salvage Value | Deprn Basis | Annual Deprn. | NBV |
---|---|---|---|---|---|
5 | 4,000,000 | 400,000 | 400,000 | 133,333 | 266,667 |
6 | 4,000,000 | 400,000 | 400,000 | 133,333 | 133,334 |
7 | 4,000,000 | 400,000 | 400,000 | 132,334 | 1,000 |
Table 1 - 19. (Page 1 of 1) |
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