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Use a flat-rate method to depreciate the asset over time using a fixed rate.
Oracle Assets uses a flat-rate and either the recoverable cost or the recoverable net book value as of the beginning of the fiscal year to calculate depreciation using a flat-rate depreciation method. The asset continues to depreciate until its recoverable cost and accumulated depreciation are the same.
Since the asset is using a half-year prorate convention, the prorate date is in December--the mid-point of your fiscal year. For assets that have a prorate date at the mid-point of the fiscal year, depreciation expense for the first fiscal year of life is 50% of the amount for a full fiscal year. For the asset in our example, a full fiscal year depreciation amount is $2,000 (20% of $10,000), so the depreciation for the first year (fiscal 1993) is $1,000.
You can specify whether to start taking depreciation in the period of the date placed in service or the prorate date using the depreciate when placed in service flag for the prorate convention. If you elect to start depreciation in the accounting period corresponding to the date placed in service, Oracle Assets starts to depreciate the asset in AUG-92, and the depreciation for each period is $100 ($1000 divided by 10--the number of periods from August to May).
If you elect to start depreciation on the prorate date, Oracle Assets does not start to depreciate the asset until December. The depreciation for each period from DEC-92 to MAY-93 is $166.67 ($1,000 divided by 6--the number of periods from December to May).
Similarly, the net book value at the beginning of the 1995 fiscal year is $7,200. Oracle Assets calculates annual depreciation of $1,440 and divides this amount evenly to get the depreciation amount for each period. Oracle Assets repeats this process until the asset is fully depreciated or retired.
When you add an asset, you can select a basic rate and an adjusting rate. Oracle Assets increases the basic rate by the adjusting rate to give you the adjusted rate. This is your flat-rate for the fiscal year.
Depreciation Rate = Basic Rate x (1 + Adjusting Rate) + Bonus Rate
Annual Depreciation Amount = Depreciation Rate x Depreciation Calculation Basis x Fraction of Year Held
For reporting authorities that allow additional depreciation in the early fiscal years of an asset life, you can assign an additional bonus rate on top of the flat-rate. Oracle Assets adds the bonus rate to the adjusted rate to give you the flat-rate for the fiscal year.
Specifying Dates for Prorate Conventions
Defining Bonus Depreciation Rules
About Prorate and Retirement Conventions
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