Understanding International Depreciation Methods

Appendix: Understanding International Depreciation Methods

The demonstration data that is included in JD Edwards EnterpriseOne software includes depreciation methods that are designed to meet international requirements. This appendix discusses:

French straight line (method 19).
French declining balance (method 20).
French derogatory (method 21).
German building (method 22).
German declining balance (method 23).
German compound (method 24).
German investment tax credit (method 25).
German replacement cost (method 26).
Italy straight line (method 27).
Italy anticipated (method 28).
Italy complete (method 29).
Spain declining balance (method 30).
Czech Republic percentage rate (method 31).
Japan fixed installment (method 32).
Japan declining balance (method 33).
Japan beginning special (method 34).
Japan accelerated (method 35).
Japan increased (method 36).
Japan excess (method 37).
Japan salvage (method 38).
Japan reserve reduction (method 39).
Japan composite (method 40).
Korea straight line (method 41).
Korea revaluation SL (method 42).
Korea capital expenditure SL (method 43).
Korea special rate SL (method 44).
Korea declining balance (method 45).
Korea revaluation declining (method 46).
Korea capital expenditure DB (method 47).
Korea special rate SL (method 48).
Primary secondary tertiary (method 49).

French Straight Line (Method 19)

For the example that follows, these assumptions apply:

Actual Start Date: June 15, 1997.
Modified Start Date: June 15, 1997.
Cost: 100.000 FRF (without tax).
Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 19:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-10904.11	10904.11	100.000 / 6012 199 / 365
1998	December 31, 1998	-20000.00	2000.00	100.000 / 60 * 12
1999	December 31, 1999	-20000.00	2000.00	100.000 / 60 * 12
2000	December 31, 2000	-20000.00	2000.00	100.000 / 60 * 12
2001	December 31, 2001	-20000.00	2000.00	100.000 / 60 * 12
2002	December 31, 2002	-9095.89	9095.89	100.000 / 60 * 12 * 166 / 365

Note. Although the asset life is five years, the asset takes six fiscal years to depreciate. The first and last years are split, depending on the actual start date. The number of days in the first year is 200 because it includes the start and end dates. The French straight line method requires 199 days, so one day is subtracted in the formula to calculate the correct apportionment percent for the first year. By default, the last year takes the remaining basis and includes salvage value.

This table explains the requirements for method 19:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 19 for an asset life of 48 life periods and 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the actual start date. This method calculates the initial year percent by the number of days in the first year. Note. Typically, the number of days in a year includes the start day and end day. However, the French straight-line method uses one fewer day. The French requirement is calculated by subtracting one day from the current number of days in the year.
Conventions	The disposal year is the actual disposal date.
Life year rules	Life year 1 to 1 contains the formula that calculates the initial year apportionment. Life years 2 to 4 contain the standard, straight line formula for an annual amount.
Calculations	Formulas calculate a year of straight-line depreciation. The basis includes salvage value.
Disposals	Method 19 has no disposal rules.

French Declining Balance (Method 20)

For the example that follows, these assumptions apply:

Actual Start Date: June 15, 1997.
Modified Start Date: June 1, 1997.
Cost: 100.000 FRF (without tax).
Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 20:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-23.333,33	23.333,33	100.000 * 40 percent / 12*7
1998	December 31, 1998	-30.666,66	30.666,66	(100.000-23.333,33) * 40 percent
1999	December 31, 1999	-18.400,00	18.400,00	(76.666,67-30.666,66) * 40 percent
2000	December 31, 2000	-13.800,00	13.800,00	(46.000,01-18.400,00)/2
2001	December 31, 2001	-13.800.00	13.800,00	13.800,00

Note. Even though the asset life is complete on May 31, 2002, the system calculates depreciation for five complete periods in the fiscal year (December 31, 2001). The calculations for the initial year are based on periods, rather than on days.

This table explains the requirements for method 19:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 20 for an asset life of 36, 48, 60, 72, and 84 life periods.
Balance adjustments	End of the year with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the start of the period. This method calculates the initial year percent by periods in the first year.
Conventions	No conventions are needed.
Life year rules	The first life year is from year 1 to 2 years less than the total number of years. The second life year is for 1 year less than the total number of years. The third life year is for the last year in the asset's life. For example, if the asset has a life of five years, the first life year corresponds to years 1 through 3, the second life year corresponds to year 4, and the third life year corresponds to year 5.
Disposals	Method 20 has no disposal rules.

Calculations

The declining balance is based on a declining coefficient, as illustrated in this table:

Declining Coefficient	Probable Asset Life	Declining Rate
1.5	3 and 4 years	50 and 37.5 percent
2	5 and 6 years	40 and 33.33 percent
2.5	More than 6 years	2.5 * life percent

Subtract half of the basis in the year before the total number of years.

Use the remaining basis for calculations.

French Derogatory (Method 21)

Use the French Derogatory method to calculate the difference between the French Declining Balance method (Method 20) and the French Straight Line method (Method 19). The French Derogatory method requires you to set up these AAIs for depreciation to calculate correctly:

DSA1 - Use this AAI to retrieve the amount from the AA ledger inception-to date balance from the Asset Account Balances File table (F1202) for the account that is identified on this AAI.
DSA3 - Use this AAI to retrieve the amount from the D1 ledger inception-to-date balance from table F1202 for the account that is identified on this AAI.

The account that is used for both of the AAIs should be the Accumulated Depreciation account from the Depreciation Default Coding. The AAIs should appear as follows for DSA1 and DSA3:

The French Derogatory method also requires you to set up this depreciation default coding information:

Ledger Type	Depreciation Method
AA	French Straight Line (Method 19)
D1	French Declining Balance (Method 20)
D3	French Derogatory (Method 21)

This illustration shows how depreciation default coding should be set up for a cost account that is used for 48 life-month French fixed assets:

When you add assets to this account, the depreciation default information automatically uses these depreciation methods. Ensure that cost amounts are copied from the AA ledger to the D1 and D3 ledgers.

After setup is complete and assets are entered in the system, Method 21 computes the difference between the D1 ledger and the AA ledger. The results of 21 are stored in the D3 ledger.

Note. To compute the depreciation for method 21, you must compute depreciation in final mode for the French Straight Line method and the French Declining Balance. You can compute depreciation for all three ledgers concurrently in final mode.

For the example that follows, these assumptions apply:

Actual start date: June 15, 1997.
Modified start date: June 1, 1997.
Cost: 100.000 FRF (without tax).
Asset life: 4 years (48 life periods).

This example shows the depreciation of an asset when using depreciation method 21:

Year	End of Year Date	Declining Balance	Straight Line	Derogatory Depreciation
1997	December 31, 1997	28.125	17.809	10.316
1998	December 31, 1998	26.953	25.000	1.953
1999	December 31, 1999	22.461	25.000	-2.539
2000	December 31, 2000	22.461	25.000	-2.539
2001	December 31, 2001	0	7.191	-7.191

Note. This example uses the straight-line method in the AA ledger type and the declining balance method in a separate ledger type. The formula uses the calculated final balances to produce the balance adjustments for derogatory depreciation.

Alternatively, you can calculate derogatory depreciation using the JD Edwards EnterpriseOne Report Design Aid tool in one of these ways:

From the amounts that are computed on the D3 ledger, create a journal entry to the AA ledger for the appropriate offset accounts.

Use one account for negative amounts, and the other account for positive amounts. The government can provide the company with the necessary statutory account numbers.
Calculate the difference between the two ledger types, and create journal entries for posting.

This table explains the requirements for method 21:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 21 for an asset life of 48 life periods and 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent Straight-line and declining balance methods must be updated before derogatory depreciation can be calculated.
Modified start date	The modified start date is the start of the period.
Conventions	Allow Over Depreciation is set to option 3 (accumulated depreciation might exceed adjusted basis and continue beyond the asset's life). Negative depreciation is allowed.
Life year rules	The life year from 1 to 998.
Calculations	Calculate the difference between declining balance and straight-line balance.
Disposals	Method 21 has no disposal rules.

German Building (Method 22)

For the example that follows, these assumptions apply:

Actual Start Date: March 15, 1997.
Modified Start Date: March 1, 1997.
Cost: 3.600.000,00 DEM (without tax).
Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 22:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31,1997	-210.000	210.000	3.600.000 * 7 percent for 10 periods
1998	December 31, 1998	-252.000	252.000	3.600.000 * 7 percent for 12 periods
1999	December 31, 1999	-252.000	252.000	3.600.000 * 7 percent for 12 periods
2000	December 31, 2000	-252.000	252.000	3.600.000 * 7 percent for 12 periods
2001	December 31, 2001	-252.000	252.000	3.600.000 * 7 percent for 12 periods
2002	December 31, 2002	-132.000	132.000	3.600.000 * 7 percent for 2 periods, 3.600.000 * 5 percent for 10 periods
2003	December 31, 2003	-108.000	108.000	3.600.000 * 5 percent for 12 periods
2004	December 31, 2004	-108.000	108.000	3.600.000 * 5 percent for 12 periods
2005	December 31, 2005	-108.000	108.000	3.600.000 * 5 percent for 12 periods
2006	December 31, 2006	-108.000	108.000	3.600.000 * 5 percent for 12 periods
2007	December 31, 2007	-132.000	132.000	3.600.000 * 5 percent for 2 periods, 3.600.000 * 2.5 percent for 10 periods
2008	December 31, 2008	-90.000	90.000	3.600.000 * 2.5 percent for 12 periods
2009-2025	December 31, 20xx	-90.000	90.000	3.600.000 * 2.5 percent for 12 periods
2026	December 31, 2026	-90.000	90.000	3.600.000 * 2.5 percent for 12 periods
2027	December 31, 2027	-7.500	7.500	3.600.000 * 2.5 percent for 2 periods

Note. Use the life year reference to force depreciation to be calculated every period.

This table explains the requirements for method 22:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 22 for an asset life of 360 life periods.
Balance adjustments	The depreciation percent changes, based on the asset life year. Use the asset life year reference to force period adjustments.
Modified start date	The modified start date is the start of the period.
Conventions	The life year reference should come from the modified start date.
Life year rules	Asset life years are used, instead of fiscal life years. Life year 1 to 5 takes 7 percent. Life year 6 to 10 takes 3 percent. Life year 11 to 20 takes 2.5 percent.
Calculations	Formulas must use the multiplier times the annual percent. The basis is cost.
Disposals	Method 22 has no disposal rules.

German Declining Balance (Method 23)

For the example that follows, these assumptions apply:

Actual Start Date: March 15, 1997.
Modified Start Date: March 1, 1997.
Cost: 100.000,00 DEM (without tax).
Asset Life: 10 years (120 life periods).

This table shows the depreciation of an asset when using depreciation method 23:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-25.000	25.000	100.00030 percent (10/12) periods
1998	December 31, 1998	-22.500	22.500	(100.000-25.000) * 30 percent * (12/12) periods
1999	December 31, 1999	-15.750	15.750	(100.000-47.500) * 30 percent * (12/12) periods
2000	December 31, 2000	-11.025	11.025	(100.000-63.250) * 30 percent * (12/12) periods
2001	December 31, 2001	-7.717,5	7.717,5	(100.000-74.275) * 30 percent * (12/12) periods
2002	December 31, 2002	-5.402,25	5.402,25	(100.000-89.992,5) * 30 percent * (12/12) periods
2003	December 31, 2003	-3.781,58	3.781,58	(100.000-87.394,75) * 30 percent * (12/12) periods
2004	December 31, 2004	-2.786,42	2.786,42	(100.000-91.176,33) / (38*12) periods
2005	December 31, 2005	-2.786,42	2.786,42	(100.000-93.962,75) / (26*12) periods
2006	December 31, 2006	-2.786,43	2.786,43	(100.000-96.749,17) / (14*12) periods
2007	December 31, 2007	-464,40	464,40	100.000-99.353,60 for last 2 periods

Note. The straight line lower limit replaces the declining balance calculation in the eighth year of the asset's life.

This table explains the requirements for method 23:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 23 for an asset life of 120 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the start of the period.
Conventions	No conventions are needed.
Life year rules	Life year 1 to 10 takes 30 percent declining balance.
Calculations	Use 30 percent as a multiplier for the declining balance. The upper limit is three times straight line. The lower limit is straight line.
Disposals	Method 23 has no disposal rules.

German Compound (Method 24)

For the example that follows, these assumptions apply:

Actual Start Date: June 12, 1997.
Modified Start Date: June 1, 1997.
Cost: 100.000,00 DEM (without tax).
Asset Life: 12 years (144 life periods).

These tables show the depreciation of an asset when using depreciation method 24:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-4.882,50	4.882,50
1998	December 31, 1998	-8.327,63	8.327,63
1999	December 31, 1999	-8.327,63	8.327,63
2000	December 31, 2000	-8.350,44	8.350,44
2001	December 31, 2001	-8.327,63	8.327,63
2002	December 31, 2002	-8.327,63	8.327,63
2003	December 31, 2003	-8.327,63	8.327,63
2004	December 31, 2004	-8.350,44	8.350,44
2005	December 31, 2005	-8.327,63	8.327,63
2006	December 31, 2006	-8.327,63	8.327,63
2007	December 31, 2007	-8.327,62	8.327,62
2008	December 31, 2008	-8.350,44	8.350,44
2009	December 31, 2009	-3.445,13	3.445,13

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	-7.328,77	7.328,77	100.000 / 4383 * 214 days	100.00 * 12.5 percent * 58.630, 13 Initial Year percent
1998	-12.500,00	12.500,00	(100.000 - 4.882,5) / 4169 * 365 days	100.000 * 12.5 percent
1999	-12.500,00	12.500,00	(100.000-13.215,13 / 3804 * 365 days	100.00 * 12.5 percent
2000	-12.500,00	12.500,00	(100.000 - 21.537,76) / 3439 * 366 days	100.00 * 12.5 percent
2001	-5.171,23	5.171,23	(100.000 - 29.888,20) / 3073 * 365 days	100.00 * 12.5 percent * 41.369, 87 Last Year percent
2002			(100.000 - 38.215,83) / 2708 * 365 days
2003			(100.000 - 46.543,46) / 2343 * 365 days
2004			(100.000 - 54.871,09) / 1978 * 366 days
2005			(100.000 - 63.221,54) / 1612 * 365 days
2006			(100.000 - 71.549,17) / 1247 * 365 days
2007			(100.000 - 79.876,80) / 882 * 365 days
2008			(100.000 - 88.204,43) / 517 * 366 days
2009			(100.000 - 96.554,87) / 151 * 151 days

Note. The compound 50 percent is apportioned over five fiscal years. The first and last year have an apportionment percent combined of 100 percent to allow four years of 12.5 percent compound depreciation. Continuing depreciation beyond the asset's life is needed, so remaining basis is not taken in the last year of the asset's life, which reverses the compound depreciation. AAIs (SDA and SDE1) for secondary accounts were set up.

This table explains the requirements for method 24:

Requirement	Explanation
Asset life	The demonstration data includes a version of method 24 for an asset life of 144 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the start of the period.
Conventions	Secondary Accounts are set to two accumulated depreciation accounts and two depreciation expense accounts. Allow Over Depreciation is set to exceed adjusted basis and to continue beyond the asset's life.
Life year rules	Life years 1 to 998 take straight line for rule 1. The demonstration data includes examples for 50 percent over the first four years and for 50 percent in the first year. Different rules for the first, middle, and last years control the life year percent that matches the fiscal year.
Calculations	Remaining number of days are used for straight line. An annual rule multiplier is used for the secondary 50 percent.
Disposals	Method 24 has no disposal rules.

German Investment Tax Credit (Method 25)

For the example that follows, these assumptions apply:

Actual Start Date: June 15, 1997.
Modified Start Date: June 15, 1997.
Cost: 100.000,00 DEM (without tax).
Asset Life: 10 years (120 life periods).

These tables show the depreciation of an asset when using depreciation method 25:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-5.476,45	5.476,45
1998	December 31, 1998	-9.994,52	9.994,52
1999	December 31, 1999	-9.994,52	9.994,52
2000	December 31, 2000	-10.021,91	10.021,91
2001	December 31, 2001	-9.994,52	9.994,52
2002	December 31, 2002	-9.994,52	9.994,52
2003	December 31, 2003	-9.994,53	9.994,53
2004	December 31, 2004	-10.021,91	10.021,91
2005	December 31, 2005	-4.507,12	4.507,12
2006	December 31, 2006
2007	December 31, 2007

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997			100.000 / 3652 * 200 days
1998			(100.000 - 5.476,45) / 3452 * 365 days
1999			(100.00 - 15.470,97) / 3087 * 365 days
2000			(100.000 - 25.465,49) / 2722 * 366 days
2001			(100.000 - 35.487,40) / 2356 * 365 days
2002			(100.000 - 45.481,92) / 1991 * 365 days
2003			(100.000 - 55.476,44) / 1626 * 365 days
2004			(100.000 - 65.470,97) / 1261 * 365 days
2005	-8.156,42	8.156,42	100.000 - 20.000- 75.492,88	20.000 / 895 * 365 days
2006	-8.156,43	8.156,43	(100.000 - 35.487,40) / 2356 * 365 days	(20.000 - 8.156,42) / 530 * 365 days
2007	-3.687,15	3.687,15		(20.000 - 16.312,85) / 165 * 165 days

Note. Remaining basis uses the investment tax credit as a salvage value to stop depreciating. AAIs (SDA and SDE1) for secondary accounts were set up.

This table explains the requirements for method 25:

Requirement	Explanation
Asset life	The demonstration data includes a version of method 25 for an asset life of 120 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the actual start date.
Conventions	Secondary Accounts are set to two accumulated depreciation accounts and to two depreciation expense accounts. Allow Over Depreciation is set to not exceed adjusted basis and continue beyond the asset's life. Disposal Conventions is set to the actual disposal date.
Life year rules	Life years 1 to 998 take straight line for rule 1 with Investment Tax Credit as part of salvage. Start depreciating the Investment Tax Credit in a separate account in the eighth year.
Calculations	Remaining number of days are used for straight line. Remaining number of days are used for straight line of the Investment Tax Credit, which is used as basis.
Disposals	Method 25 has no disposal rules.

German Replacement Cost (Method 26)

For the example that follows, these assumptions apply:

Actual Start Date: June 15, 1997.
Modified Start Date: June 1, 1997.
Cost: 100.000,00 DEM (without tax).
Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 26:

Year	End of Year Date	GL Statistic	Accumulated Depreciation	Depreciation Expense	Rule 1 Calculation
1997	December 31, 1997	95.000	-10.000	10.000	100.00 / 95.000 * 95.000
1998	December 31, 1998	90.000	-9.473,68	9.473,68	100.00 / 95.000 * 90.000
1999	December 31, 1999	85.000	-8.947,37	8.947,37	100.00 / 95.000 * 85.000
2000	December 31, 2000	80.000	-8.421,05	8.421,05	100.00 / 95.000 * 80.000
2001	December 31, 2001	75.000	-7.894,74	7.894,74	100.00 / 95.000 * 75.000
2002	December 31, 2002	70.000	-7.368,42	7.368,42	100.00 / 95.000 * 70.000

Note. The AAI (DS4) must be set up for the GL Statistic. The GL Statistic must come from the AU ledger type. Other ledger types can be retrieved with elements from both Asset Account Balances File table (F1202) and the Account Balances table (F0902) balances. The calculation can continue beyond the asset's life.

This table explains the requirements for method 26:

Requirement	Explanation
Asset life	The demonstration data includes a version of method 26 for an asset life of 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the start of the period.
Conventions	Allow Over Depreciation is set to not exceed adjusted basis and continue beyond the asset's life.
Life year rules	Life years 1 to 998 use the formula calculation.
Calculations	Use the cost divided by the insurance value and multiplied by the GL Actual Unit Statistic.
Disposals	Method 26 has no disposal rules.

Italy Straight Line (Method 27)

For the example that follows, these assumptions apply:

Actual Start Date: April 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 10.000.000 ITL (without tax).
Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 27:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997		2.000.000	10.000.000 / 60 / 12
1998	December 31, 1998	-2.000.000	2.000.000	10.000.000 / 60 / 12
1999	December 31, 1999	-2.000.000	2.000.000	10.000.000 / 60 / 12
2000	December 31, 2000	-2.000.000	2.000.000	10.000.000 / 60 / 12
2001	December 31, 2001	-2.000.000	2.000.000	10.000.000 / 60 / 12

Note. Because the asset's life starts at the beginning of the fiscal year, the asset is fully depreciated in five complete years.

This table explains the requirements for method 27:

Requirement	Explanation
Asset life	The demonstration data includes a version of method 27 for an asset life of 36, 60, and 120 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	No conventions are needed.
Life year rules	Life year 1 to the year-end of the asset
Calculations	Formulas calculate a year of straight line depreciation for the whole year. Basis includes the salvage value.
Disposals	Method 27 has no disposal rules.

Italy Anticipated (Method 28)

For the example that follows, these assumptions apply:

Actual Start Date: April 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 10.000.000 ITL (without tax).
Asset Life: 4 years (48 life periods).

These tables show the depreciation of an asset when using depreciation method 28:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-1.500.000	1.500.000
1998	December 31, 1998	-1.500.000	1.500.000
1999	December 31, 1999	-1.500.000	1.500.000
2000	December 31, 2000	-1.000.000	1.000.000

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	-1.500.000	1.500.000	10.000.000 * 15 percent	10.000.000 * 15 percent
1998	-1.500.000	1.500.000	10.000.000 * 15 percent	10.000.000 * 15 percent
1999	-1.500.000	1.500.000	10.000.000 * 15 percent	10.000.000 * 15 percent
2000			10.000.000 -30.000.00 -30.000.00

Note. The AAIs (SDA and SDE1) need to be set up for the secondary accounts. Other variations of the anticipated life-year percent are set up with method 28.

This table explains the requirements for method 28:

Requirement	Explanation
Asset life	The demonstration data includes a version of method 28 for an asset life of 48 life periods at 15 percent, 48 life periods at 20 percent, 60 life periods at 30 percent, and 84 life periods at 10 percent.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	Secondary Accounts are set to two accumulated depreciation accounts and to two depreciation expense accounts. Allow Over Depreciation is set to not exceed adjusted basis and continue beyond the asset's life.
Life year rules	Life year 1 to 3 times 15 percent. Life year 4 takes the remaining basis in the primary rule (through year 998).
Calculations	Multiply cost by 15 percent. Basis includes the salvage value.
Disposals	Method 28 has no disposal rules.

Italy Complete (Method 29)

For the example that follows, these assumptions apply:

Actual Start Date: April 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 10.000.000 ITL (without tax).
Asset Life: 1 year (12 life periods).

This table shows the depreciation of an asset when using depreciation method 29:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-10.000.000	10.000.000	10.000.000

Note. The requirement to depreciate only assets with a cost under 1.000.000 lira can be done with data selection that is less than the amount in the Asset Account Balance File table (F1202) for Year to Date Amount (FLAPYN) or the Balance Forward (FLAPYC).

This table explains the requirements for method 29:

Requirement	Explanation
Asset life	The demonstration data includes a version of method 29 for an asset life of 12 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	No conventions are needed.
Life Year Rules	Life year 1 to 1
Calculations	Fully depreciate cost. Basis includes the salvage value.
Disposals	Method 29 has no disposal rules.

Spain Declining Balance (Method 30)

For the example that follows, these assumptions apply:

Actual Start Date: July 11, 1997.
Modified Start Date: July 11, 1997.
Cost: 10.000.000 ESP (without tax).
Asset Life: 6.66 years (72 life periods).

This table shows the depreciation of an asset when using depreciation method 30:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-1.430.137	1.430.137	10.000.000 * 30 percent * (174 / 365) Days
1998	December 31, 1998	-2.570.959	2.570.959	(10.000.000 - 1.430.137 * 30 percent
1999	December 31, 1999	-1.799.671	1.799.671	(10.000.000 - 4.001.096) * 30 percent
2000	December 31, 2000	-1.259.770	1.259.770	(10.000.000 - 5.800.7670 * 30 percent
2001	December 31, 2001	-881.839	881.839	(10.000.000 - 7.060.537) * 30 percent
2002	December 31, 2002	-617.287	617.287	(10.000.000 - 7.942.376 * 30 percent
2003	December 31, 2003	-1.440.337	1.440.337	10.000.000 - 8.559.663

Note. Life year 7 automatically depreciates to remaining basis.

This table explains the requirements for method 30:

Requirement	Explanation
Asset life	The demonstration data includes a version of method 30 for an asset life of 72 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the actual start date, next period date, or start of period.
Conventions	Disposal convention is the actual disposal date with the actual start date.
Life year rules	Life year 1 to 1 declining balance with initial year apportionment. Life year 2 to 6 declining balance. Life year 7 is remaining basis.
Calculations	Declining balance of 30 percent. Basis includes the salvage value.
Disposals	Method 30 has no disposal rules.

Czech Republic Percentage Rate (Method 31)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 90.000 CSK (without tax).
Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 31:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-12.780	12.780	90.000 * 14.2 percent * (12 / 12) Periods in Year
1998	December 31, 1998	-25.740	25.740	90.000 * 28.6 percent * (12 / 12) Periods in Year
1999	December 31, 1999	-25.740	25.740	90.000 * 28.6 percent * (12 / 12) Periods in Year
2000	December 31, 2000	-25.740	25.740	90.000 * 28.6 percent * (12 / 12) Periods in Year
2001	December 31, 2001			90.000 - 90.000

Note. The compute direction by period uses the life year reference to calculate the percent rate based on the asset's life and not a fiscal year. The compute direction for current year calculates the percent rate based on a fiscal year and apportions the first year differently, depending on the start date of the asset. The five-year methods apply a different percent rate in later years.

This table explains the requirements for method 31:

Requirement	Explanation
Asset life	The demonstration data includes a version of method 31 for an asset life of 48 and 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent Period with life year reference
Modified start date	The modified start date is the whole year, midyear, or start of period.
Conventions	No conventions are needed for current year compute direction. Disposal convention is set for the midyear modified start date. Life year reference is needed for compute direction by period.
Life year rules	Life year 1 to 1, including initial year apportionment. Life year 2 to 4 percent rate. Life year 5 is remaining basis.
Calculations	Basis times the percent rate of 14.2 for the 1st year and 28.6 for every year thereafter. Basis includes the salvage value.
Disposals	Method 31 has no disposal rules.

Japan Fixed Installment (Method 32)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: July 2, 1997.
Cost: 10.000 JPY (without tax).
Salvage: 10 percent of cost.
Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 32:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-900	900	9.000 * 20 percent * (6 / 12) Periods in Year
1998	December 31, 1998	-1.800	1.800	9.000 * 20 percent * (12 / 12) Periods in Year
1999	December 31, 1999	-1.800	1.800	9.000 * 20 percent * (12 / 12) Periods in Year
2000	December 31, 2000	-1.800	1.800	9.000 * 20 percent * (12 / 12) Periods in Year
2001	December 31, 2001	-1.800	1.800	9.000 * 20 percent * (12 / 12) Periods in Year
2002	December 31, 2002	-900	900	10.000 - 8.100 + 1.000

Note. The years for a five-year asset overlap into a sixth fiscal year due to the initial term of apportionment.

This table explains the requirements for method 32:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 32 for an asset life of 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the midyear, start of period, or half-year.
Conventions	Disposal conventions are set for modified start dates of midyear and half-year.
Life year rules	Life year 1 to 5 at a fixed rate percent. Life year 6 is remaining basis.
Calculations	Basis times the percent rate of 20 percent. Basis includes the salvage value.
Disposals	Method 32 has no disposal rules.

Japan Declining Balance (Method 33)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: July 2, 1997.
Cost: 10.000 JPY (without tax).
Salvage: 10 percent of cost.
Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 33:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-1.845	1.845	10.000 * 36.9 percent * (6 / 12) Periods in Year
1998	December 31, 1998	-3.009	3.009	(10.000 - 1.845) * 36.9 percent * (12 / 12) Periods in Year
1999	December 31, 1999	-1.899	1.899	(10.000 - 4.854) * 36.9 percent * (12 / 12) Periods in Year
2000	December 31, 2000	-1.198	1.198	(10.000 - 6.753 * 36.9 percent * (12 / 12) Periods in Year
2001	December 31, 2001	-756	756	(10.000 - 7.951 * 36.9 percent * (12 / 12) Periods in Year
2002	December 31, 2002	-293	293	10.000 - 8.707 + 1.000

Note. The years for a five-year asset overlap into a sixth fiscal year due to the initial term of apportionment.

This table explains the requirements for method 33:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 33 for an asset life of 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the midyear, start of period, or half-year.
Conventions	Disposal conventions are set for modified start dates of midyear and half year.
Life year rules	Life year 1 to 5 at a fixed rate percent. Life year 6 is remaining basis, including salvage.
Calculations	Basis times the percent rate of 36.9 percent, including accumulated depreciation. Basis includes the salvage value.
Disposals	Method 33 has no disposal rules.

Japan Beginning Special (Method 34)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: July 2, 1997.
Cost: 10.000 JPY (without tax).
Salvage: 10 percent of cost.
Asset Life: 5 years (60 life periods).

These tables show the depreciation of an asset when using depreciation method 34:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-1.845	1.845
1998	December 31, 1998	-2.456	2.456
1999	December 31, 1999	-1.549	1.549
2000	December 31, 2000	-978	978
2001	December 31, 2001	-617	617
2002	December 31, 2002	-55	55

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	-1.500	1.500	10.000 * 36.9 percent (6 / 12) Periods	10.000*15 percent
1998			10.000 * 36.9 percent * (12 / 12) Periods
1999			(10.000 - 5.801) * 36.9 percent * (12 / 12) Periods
2000			(10.000 - 7.350) * 36.9 percent * (12 / 1) Periods
2001			(10.000 - 8.328) * 36.9 percent * (12 / 12) Periods
2002			(10.000 - 8.945) - 1.000

This example uses primary and secondary rules. The demonstration data also includes a version using primary rules only. The primary and secondary rules use current year to date. The primary rules use only remaining compute direction.

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts. These calculations can be done using only primary rules by including the secondary calculations within the primary rule formulas.

This table explains the requirements for method 34:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 34 for an asset life of 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the midyear, start of period, or half-year.
Conventions	The secondary account percent is set to allow two accumulated depreciation accounts and two depreciation expense accounts. The disposal convention matches the midyear and half-year initial term apportionment.
Life year rules	Life year 1 to 5 at a fixed rate percent. Secondary rule 1 to 1 takes an extra 15 percent the first year. Life year 6 is remaining basis (primary and secondary accounts), including salvage.
Calculations	Basis times the percent rate of 36.9 percent, including accumulated depreciation. Basis includes the salvage value.
Disposals	Method 34 has no disposal rules.

Japan Accelerated (Method 35)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: July 2, 1997.
Cost: 10.000 JPY (without tax).
Salvage: 10 percent of cost.
Asset Life: 7 years (84 life periods).

These tables show the depreciation of an asset when using depreciation method 35:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-1.400	1.400
1998	December 31, 1998	-2.337	2.337
1999	December 31, 1999	-1.572	1.572
2000	December 31, 2000	-1.057	1.057
2001	December 31, 2001	-714	714
2002	December 31, 2002	-484	484
2003	December 31, 2003	-244	244

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	-252	252	10.000 * 28 percent * (6 / 12) Periods	10.000 * 28 percent * (6 / 12) Periods * 18 percent
1998	-397	397	(10.000 - 1.400 - 252) * 28 percent * (12 / 12) Periods * 17 percent	(10.000 - 1.400 - 252) * 28 percent * (12 / 12) Periods * 17 percent
1999	-267	267	(10.000 - 3.737 - 649) * 28 percent * (12 / 12) Periods	(10.000 - 3.737 - 649) * 28 percent * (12 / 12) Periods * 17 percent
2000	-169	169	(10.000 - 5.309 - 916) * 28 percent * (12 / 12) Periods	(10.000 - 5.309 - 916) * 28 percent * (12 / 12) Periods * 16 percent
2001	-107	107	(10.000 - 6.366 - 1.085) * 28 percent * (12 / 12) Periods	(10.000 - 6.366 - 1.085) * 28 percent * (12 / 12) Periods * 15 percent
2002			(10.000 - 7.080 - 1.192) * 28 percent * (12 / 12) Periods
2003			10.000 - 7.564 - 1.192 - 1000

This table explains the requirements for method 35:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 35 for an asset life of 84 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the midyear, start of period, or half-year.
Conventions	The secondary account percent is set to allow two accumulated depreciation accounts and two depreciation expense accounts. The disposal convention matches the midyear and half-year initial term apportionment.
Life year rules	Primary rule life year 1 to 6 at a declining rate of 28 percent. Primary rule life year 7 is remaining basis (primary and secondary accounts), including salvage. Secondary rule life year 1 takes 18 percent of the declining balance. Secondary rule life years 2 to 3 take 17 percent of the declining balance. Secondary rule life year 4 takes 16 percent of the declining balance. Secondary rule life year 5 takes 15 percent of the declining balance.
Calculations	Basis times the percent rate of 28 percent, including accumulated depreciation. Basis includes the salvage value.
Disposals	Method 35 has no disposal rules.

Japan Increased (Method 36)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: July 2, 1997.
Cost: 10.000 JPY (without tax).
Salvage: 10 percent of cost.
Asset Life: 7 years (84 life periods).

These tables show the depreciation of an asset when using depreciation method 36:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-1.400	1.400
1998	December 31, 1998	-2.353	2.353
1999	December 31, 1999	-1.579	1.579
2000	December 31, 2000	-1.137	1.137
2001	December 31, 2001	-785	785
2002	December 31, 2002	-529	529
2003	December 31, 2003	-261	261

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	-196	196	10.000 * 28 percent * (6 / 12) Periods	10.000 * 28 percent * (6 / 12) Periods * 14 percent
1998	-412	412	(10.000 - 1.400 - 196) * 28 percent * (12 / 12) Periods	(10.000 - 1.400 - 196) * 28 percent * (12 / 12) Periods * 17.5 percent
1999			(10.000 - 3.737 - 649) * 28 percent * (12 / 12) Periods	< 10 percent
2000	-119	119	(10.000 - 5.332 - 608) * 28 percent * (12 / 12) Periods	(10.000 - 5.332 - 608) * 28 percent * (12 / 12) Periods * 10.5 percent
2001	-130	130	(10.000 - 6.469 - 727) * 28 percent * (12 / 12) Periods	(10.000 - 6.469 - 727) * 28 percent * (12 / 12) Periods * 16.62 percent
2002	-99	99	(10.000 - 7.254 - 857) * 28 percent * (12 / 12) Periods	(10.000 - 7.254 - 857) * 28 percent * (12 / 12) Periods * 18.72 percent
2003			10.000 - 7.783 - 956 - 1000

This example uses primary and secondary rules. The demonstration data also includes a version using primary rules only. The primary and secondary rules use current year-to-date. The primary uses only remaining compute direction.

This table explains the requirements for method 36:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 36 for an asset life of 84 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year based on percent
Modified start date	The modified start date is the midyear, start of period, or half-year.
Conventions	The secondary account percent is set to allow two accumulated depreciation accounts and two depreciation expense accounts. The disposal convention matches the midyear and half-year initial term apportionment.
Life year rules	Primary rule life years 1 to 6 at a declining rate of 28 percent. Primary rule life year 7 is remaining basis (primary and secondary accounts), including salvage. Secondary rule life year 1 takes 14 percent of the declining balance. Secondary rule life year 2 takes 17.5 percent of the declining balance. Secondary rule life year 3 takes 7 percent; but since it is less than 10 percent, no balances are adjusted. Secondary rule life year 4 takes 10.5 percent of the declining balance. Secondary rule life year 5 takes 16.2 percent of the declining balance. Secondary rule life year 6 takes 18.72 percent of the declining balance.
Calculations	Basis times the percent rate of 28 percent including accumulated depreciation. Basis includes the salvage value.
Disposals	Method 36 has no disposal rules.

Japan Excess (Method 37)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: July 2, 1997.
Cost: 10.000 JPY (without tax).
Salvage: 10 percent of cost.
Asset Life: 5 years (60 life periods).

These tables show the depreciation of an asset when using depreciation method 37:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-900	900
1998	December 31, 1998	-1.800	1.800
1999	December 31, 1999	-1.800	1.800
2000	December 31, 2000	-1.800	1.800
2001	December 31, 2001	-1.800	1.800
2002	December 31, 2002	-900	900

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	-540	540	10.000 - 1.000 * 20 percent * (6 / 12) Periods * 60 percent	10.000 - 1.000 * 20 percent * (6 / 12) Periods * 60 percent
1998	-1.080	1.080	10.000 - 1.000 * 20 percent * (12 / 12) Periods	10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60 percent
1999	-1.080	1.080	10.000 - 1.000 * 20 percent * (12 / 12) Periods	10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60 percent
2000	-1.080	1.080	10.000 - 1.000 * 20 percent * (12 / 12) Periods	10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60 percent
2001	-1.080	1.080	10.000 - 1.000 - * 20 percent * (12 / 12) Periods	10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60 percent
2002	-540	540	10.000 - 1.000 * 20 percent * (6 / 12) Periods	10.000 - 1.000 * 20 percent * (6 / 12) Periods * 60 percent

This table explains the requirements for method 37:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 37 for an asset life of 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the midyear, start of period, or half-year.
Conventions	The secondary account percent is set to allow two accumulated depreciation accounts and two depreciation expense accounts. The disposal convention matches the midyear and half-year initial term apportionment.
Life year rules	Primary rule life years 1 to 5 at a declining rate of 20 percent. Primary rule life year 6 is remaining basis of the primary accounts, including salvage. Secondary rule life year 1 to 5 take 60 percent at a declining rate of 20 percent. Secondary rule life year 6 takes 60 percent of the remaining basis of the primary account, including salvage.
Calculations	Basis times the percent rate of 20 percent including accumulated depreciation. Basis includes the salvage value.
Disposals	Method 37 has no disposal rules.

Japan Salvage (Method 38)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: July 2, 1997.
Cost: 10.000 JPY (without tax).
Salvage: 5 percent of cost.
Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 38:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-1.845	1.845	10.000 * 36.9 percent * (6 / 12) Periods
1998	December 31, 1998	-3.009	3.009	(10.000 - 1.845) * 36.9 percent
1999	December 31, 1999	-1.899	1.899	(10.000 - 4.854) * 36.9 percent
2000	December 31, 2000	-1.198	1.198	(10.000 - 6.753) * 36.9 percent
2001	December 31, 2001	-756	756	(10.000 - 7.951) * 36.9 percent
2002	December 31, 2002	-477	477	(10.000 - 8.707) * 36.9 percent
2003	December 31, 2003	-301	301	(10.000 - 9.184 * 36.9 percent
2004	December 31, 2004	-15	15	(10.000 - 9.485) - 500

This example stops at 5 percent of cost with the current year compute direction. The demonstration data also includes a depreciation version to 1 yen past the 5 percent salvage value, using the remaining compute direction.

Note. Depreciation to 1 yen can be accomplished by using remaining compute direction. The asset's life is 5 years, but depreciation of salvage continues beyond the asset's life.

This table explains the requirements for method 38:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 38 for an asset life of 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the midyear, start of period, or half-year.
Conventions	Disposal conventions are set for the modified start dates of midyear and half-year. Set the convention to allow depreciation beyond the asset life but not to exceed remaining basis.
Life year rules	Life year 1 to 1 uses a fixed rate percent of 36.9 percent with the initial periods apportionment. Life years 2 to 8 uses fixed rate percent of 36.9. Life years 9 to 10 uses formulas to depreciate the 5 percent of salvage for three years (DIR1 = Remaining). Life years 11 and onward depreciate to remaining basis of 1 year (DIR1 = Remaining).
Calculations	Basis times the percent rate of 36.9 percent. Basis includes the salvage value.
Disposals	Method 38 has no disposal rules.

Japan Reserve Reduction (Method 39)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: July 2, 1997.
Cost: 20.000.000 JPY (without tax).
Salvage: 10 percent of cost.
Investment Tax Credit: 10.000.000 JPY (government-subsidized amount for tax depreciation).
Asset Life: 20 years (240 life periods).

These tables show the depreciation of an asset when using depreciation method 39:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-1.090.000	1.090.000
1998	December 31, 1998	-2.061.190	2.061.190
1999	December 31, 1999	-1.836.520	1.836.520
2000	December 31, 2000	-1.636.340	1.636.340
2001	December 31, 2001	-1.457.979	1.457.979
...
2016	December 31, 2016	-258.176	258.176
2017	December 31, 2017	-110.415	110.415

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	-545	545	20.000.000 * 10.9 percent * (6 / 12) Periods	20.000.000 - 10.000.000 * 10.9 percent * (6 / 12) Periods
1998	-1.030.595	1.030.595	(20.000.000 - 1.090.000) * 10.9 percent	(20.000.000 - 10.000.000 - 545.000) * 10.9 percent
1999	-918.260	918.260	(20.000.000 - 3.151.190) * 10.9 percent	(20.000.000 - 10.000.000 - 1.575.595) * 10.9 percent
2000	-818.170	818.170	(20.000.000 - 4.987.710) * 10.9 percent	20.000.000 - 10.000.000 - 2.493.855) * 10.9 percent
2001	-728.989	728.989	(20.000.000- 6.624.050)*10.9 percent	(20.000.000 - 10.000.000 - 3.312.025) * 10.9 percent
...
2016	-129.088	129.088	(20.000.000 - 17.631.409) * 10.9 percent	(20.000.000 - 10.000.000 - 8.815.703) * 10.9 percent
2017	-55.209	55.209	20.000.000 - 2.000.000-17.889.585	20.000.000 - 10.000.000 - 1.000.000 - 8.944.791

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The secondary rules could be set up as primary rules so that only the subsidized tax amount is depreciated.

This table explains the requirements for method 39:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 39 for an asset life of 240 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the midyear, start of period, or half year.
Conventions	Disposal conventions are set for the modified start dates of midyear and half-year. Set the convention to allow depreciation beyond the asset life and to exceed remaining basis.
Life year rules	Primary life years 1 to 998 use a fixed rate percent of 10.9 percent, including accumulated depreciation. Secondary life years 1 to 998 use a fixed rate percent of 10.9 percent, including accumulated depreciation and tax credit.
Calculations	Basis times the percent rate of 10.9 percent. Basis includes the salvage value. Secondary formulas include the investment tax credit for the subsidized government amount.
Disposals	Method 39 has no disposal rules.

Japan Composite (Method 40)

Use a parent asset to group the assets as a composite. The cost accounts need to be the same for each parent composite group. No other assets should be booked to the composite cost account, except for assets within the composite. The general ledger cost balance is used in the depreciation calculation.

These tables show the depreciation of an asset when using depreciation method 40:

Parent Composite	Cost	Salvage
Asset 1	10.000
Asset 2	12.000
Asset 3	8.000
Asset 4	15.000
Asset 5	20.000
Asset 6	25.000
1997 Total	90.000	9.000
Asset 7	8.000
Asset 8	5.000
1998 Total	103.000	10.300

Salvage: 10 percent of cost

Asset life: 10 years (120 life periods)

This table shows depreciation using method 40:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-9.270	9.270	90.000 * 20.6 percent * (6 / 12) Periods
1998	December 31, 1998	-19.308	19.308	(103.000 - 9.270) * 20.6 percent
1999	December 31, 1999	-15.331	15.331	(103.000 - 28.578) * 20.6 percent
2000	December 31, 2000	-12.173	12.173	(103.000 - 43.909) * 20.6 percent
2001	December 31, 2001	-9.665	9.665	(103.000 - 56.082) * 20.6 percent
2002	December 31, 2002	-7.674	7.674	(103.000 - 65.747) * 20.6 percent
2003	December 31, 2003	-6.903	6.903	(103.000 - 73.421) * 20.6 percent
2004	December 31, 2004	-4.838	4.838	(103.000 - 79.514) * 20.6 percent
2005	December 31, 2005	-3.841	3.841	(103.000 - 84.352) * 20.6 percent
2006	December 31, 2006	-3.050	3.050	(103.000 - 88.193) * 20.6 percent
2007	December 31, 2007	-1.457	1.457	103.000 - 91.243 - 10.300

Note. This rule uses a parent asset to depreciate a composite total. The asset must be booked into the same cost account to use the balance in the depreciation calculation. The DSA5 AAI must be set up for using element 61 to retrieve the general ledger balance.

You can set up the composite depreciation amount with the application report writer to combine totals and create journal entries for the desired calculation.

This table explains the requirements for method 40:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 40 for an asset life of 240 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the midyear, start of period, or half-year.
Conventions	Disposal conventions are set for the modified start dates of midyear and half-year. Set the convention to allow depreciation beyond the asset life and to exceed remaining basis.
Life year rules	Primary life years 1 to 1 use a fixed rate percent of 20.6 percent, including initial year apportionment. Primary life years 2 to 998 use a fixed rate percent of 20.6 percent, including accumulated depreciation.
Calculations	Basis times the percent rate of 20.6 percent. Basis (the cost from the general ledger balance) includes the salvage value.
Disposals	Method 40 has no disposal rules.

Korea Straight Line (Method 41)

For the example that follows, these assumptions apply:

Actual Start Date: July 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 500.000 WON (without tax).
Salvage: 1 WON.
Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 41:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-125.000	125.000	500.000 * 48 / 12
1998	December 31, 1998	-125.000	125.000	500.000 * 48 / 12
1999	December 31, 1999	-125.000	125.000	500.000 * 48 / 12
2000	December 31, 2000	-124.00	124.000	500.000 - 375.000 - 1
2001	December 31, 2001

Example prior to January 1, 1995:

Actual Start Date: July 15, 1994.
Modified Start Date: January 1, 1994.
Cost: 500.000 WON (without tax).
Salvage: 10 percent cost for 48 periods, 8 percent, 6 percent, 4 percent, 2 percent of cost and 1000.
Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 41 prior to 1995:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1994	December 31, 1994	-112.500	112.500	(500.000 - 50.000) * 48 / 12
1995	December 31, 1995	-112.500	112.500	(500.000 - 50.000) * 48 / 12
1996	December 31, 1996	-112.500	112.500	(500.000 - 50.000) * 48 / 12
1997	December 31, 1997	-112.500	112.500	(500.000 - 50.000) * 48 / 12
1998	December 31, 1998	-10.000	-10.000	(500.000 - 450.000 - 40.000)
1999	December 31, 1999	-10.000	-10.000	(500.000 - 460.000 - 30.000)
2000	December 31, 2000	-10.000	-10.000	(500.000 - 470.000 - 20.000)
2001	December 31, 2001	-10.000	-10.000	(500.000 - 480.000 - 10.000)
2002	December 31, 2002	-9.00	-9.000	(500.000 - 490.000 - 1.000)
2003	December 31, 2003

Note. The asset was revalued in the 4th year of the asset's life. The revaluation amount includes the remaining calculations to finish depreciation.

This table explains the requirements for method 41:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 41 for asset lives of 48 and 60 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year, first half/second half, or midyear.
Conventions	Disposal conventions are set for first half/second half.
Life year rules	Life years 1 to 1 straight line with initial year apportionment. Life years 2 to 4 straight line. Life year 5 depreciates to 8 percent salvage. Life year 6 depreciates to 6 percent salvage. Life year 7 depreciates to 4 percent salvage. Life year 8 depreciates to 2 percent salvage. Life year 9 depreciates to 1.000.
Calculations	Straight line is the asset life divided by normal number of periods. Basis includes salvage value for the remaining compute direction.
Disposals	Method 41 has no disposal rules.

Korea Revaluation SL (Method 42)

For the example that follows, these assumptions apply:

Actual Start Date: July 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 500.000 WON (without tax); additional revaluation 300.000 in 2000.
Salvage: 1,000 WON.
Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 42:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-125.000	125.000	500.000 * 25 percent
1998	December 31, 1998	-125.000	125.000	500.000 * 25 percent
1999	December 31, 1999	-125.000	125.000	500.000 * 25 percent
2000	December 31, 2000	-212.500	212.500	(800.000 - 375.000) * 25 percent
2001	December 31, 2001	-211.500	211.500	(800.000 - 587.500 - 1000

Note. The asset was revalued in the 4th year of the asset's life. The revaluation amount is included in the remaining calculations to finish depreciation.

This table explains the requirements for method 42:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 42 for asset lives of 48 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	Allow depreciation beyond the asset's life, but do not exceed remaining basis.
Life year rules	Life years 1 to 3 take 25 percent. Life years 4 to 4 take 50 percent remaining basis, not including salvage. Life year 5 depreciates remaining basis, including salvage.
Calculations	Cost at the rate of 25 percent. Half of remaining basis, not including salvage. Basis includes salvage value.
Disposals	Method 42 has no disposal rules.

Korea Capital Expenditure SL (Method 43)

For the example that follows, these assumptions apply:

Actual Start Date: July 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 500.000 WON (without tax); additional revaluation 300.000 in 2000.
Salvage: 1,000 WON.
Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 43:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-125.000	125.000	500.000 * 25 percent
1998	December 31, 1998	-125.000	125.000	500.000 * 25 percent
1999	December 31, 1999	-125.000	125.000	500.000 * 25 percent
2000	December 31, 2000	-200.000	200.000	800.000 * 25 percent
2001	December 31, 2001	-200.000	200.000	800.000 * 25 percent
2002	December 31, 2002	-24.000	24.000	800.000 - 775.000 - 1.000

Note. The asset was revalued in the 4th year of the asset's life. The revaluation amount is included in the remaining calculations to finish depreciation.

This table explains the requirements for method 43:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 43 for asset lives of 48 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	Allow depreciation beyond the asset's life, but do not exceed remaining basis.
Life year rules	Life years 1 to 3 take 25 percent. Life years 4 to 4 take 50 percent remaining basis, not including salvage. Life year 5 depreciates remaining basis, including salvage.
Calculations	Cost at the rate of 25 percent. Half of remaining basis, not including salvage. Basis includes salvage value.
Disposals	Method 43 has no disposal rules.

Korea Special Rate SL (Method 44)

For the example that follows, these assumptions apply:

Actual Start Date: July 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 500.000 WON (without tax).
Salvage: 1,000 WON.
Asset Life: 4 years (48 life periods).

These tables show the depreciation of an asset when using depreciation method 44:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-125.000	125.000
1998	December 31, 1998	-125.000	125.000
1999	December 31, 1999	-124.000	124.000
2000	December 31, 2000
2001	December 31, 2001

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	-62.500	62.500	500.000 * 25 percent	(500.000 * 25 percent) * 50 percent
1998	-62.500	62.500	500.000 * 25 percent	(500.000 * 25 percent) * 50 percent
1999			500.000 - 250.000 - 125.000 - 1.000
2000
2001

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts. These calculations can be done by using only primary rules, including the secondary calculations within the primary rule formulas.

This table explains the requirements for method 44:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 44 for asset lives of 48 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	Allow depreciation beyond the asset's life, but do not exceed remaining basis. Set the convention to allow two accumulated depreciation accounts and two depreciation expense accounts.
Life year rules	Primary life years 1 to 2 take 25 percent of cost. Secondary life years 1 to 2 take 25 percent of cost at the rate of 50 percent. Primary life year 3 and onward depreciate remaining basis, including salvage.
Calculations	Primary 25 percent. Secondary 25 percent of cost at the rate of 50 percent. Basis includes salvage value.
Disposals	Method 44 has no disposal rules.

Korea Declining Balance (Method 45)

For the example that follows, these assumptions apply:

Actual Start Date: July 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 500.000 WON (without tax).
Salvage: 1,000 WON.
Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 45:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-264.000	264.000	500.000 * 52.8 percent
1998	December 31, 1998	-124.608	124.608	(500.000 - 264.000) * 52.8 percent
1999	December 31, 1999	-58.815	58.815	(500.000 - 388.608) * 52.8 percent
2000	December 31, 2000	-51.577	51.577	(500.000 - 447.423) - 1.000
2001	December 31, 2001

Note. Another rule is also set up for assets in service prior to January 1, 1995.

This table explains the requirements for method 45:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 45 for asset lives of 48 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	No conventions are needed.
Life year rules	Life years 1 to 3 at a fixed rate of 52.8 percent, including accumulated depreciation. Life year 4 is remaining basis, including salvage.
Calculations	Basis times the percent rate of 52.8 percent, including accumulated depreciation. Basis includes salvage value.
Disposals	Method 45 has no disposal rules.

Korea Revaluation Declining (Method 46)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 500.000 WON (without tax); 300.000 was added in 2000.
Salvage: 1,000.
Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 46:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-264.000	264.000	500.000 * 52.8 percent
1998	December 31, 1998	-124.608	124.608	(500.000 - 264.000) * 52.8 percent
1999	December 31, 1999	-58.815	58.815	(500.000 - 388.608) * 52.8 percent
2000	December 31, 2000	-317.319	317.319	(800.000 - 447.423) * 90 percent
2001	December 31, 2001	-34.258	34.258	800.000 - 764.742 - 1.000

Note. The asset was revalued with an additional 300.000 in the third year of the life.

This table explains the requirements for method 46:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 46 for asset lives of 48 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	Set the convention to continue depreciation beyond the asset's life, but not to exceed remaining basis.
Life year rules	Life years 1 to 3 at a fixed rate of 52.8 percent, including accumulated depreciation. Life year 4 takes 90 percent, including accumulated depreciation. Life years 5 to 998 take remaining basis, including salvage.
Calculations	Basis times the percent rate of 52.8 percent, including accumulated depreciation. Remaining basis includes salvage value.
Disposals	Method 46 has no disposal rules.

Korea Capital Expenditure DB (Method 47)

For the example that follows, these assumptions apply:

Actual Start Date: May 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 500.000 WON (without tax); 300.000 was added in 2000.
Salvage: 1,000.
Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 47:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense	Calculation
1997	December 31, 1997	-264.000	264.000	500.000 * 52.8 percent
1998	December 31, 1998	-124.608	124.608	(500.000 - 264.000) * 52.8 percent
1999	December 31, 1999	-58.815	58.815	(500.000 - 388.608) * 52.8 percent
2000	December 31, 2000	-186.161	186.161	(800.000 - 447.423) * 52.8 percent
2001	December 31, 2001	-87.868	87.868	(800.000 - 633.584) * 52.8 percent
2002	December 31, 2002	-77.549	77.549	800.000 - 721.451 - 1.000

Note. The asset was revalued with an additional 300.000 in the third year of the life.

This table explains the requirements for method 47:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 47 for asset lives of 48 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	Set the convention to continue depreciation beyond the asset's life, but not to exceed remaining basis.
Life year rules	Life years 1 to 5 at a fixed rate of 52.8 percent, including accumulated depreciation. Life years 6 to 998 take remaining basis, including salvage.
Calculations	Basis times the percent rate of 52.8 percent, including accumulated depreciation. Remaining basis includes salvage value.
Disposals	Method 47 has no disposal rules.

Korea Special Rate SL (Method 48)

For the example that follows, these assumptions apply:

Actual Start Date: July 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 500.000 WON (without tax).
Salvage: 1,000 WON.
Asset Life: 4 years (48 life periods).

These tables show the depreciation of an asset when using depreciation method 48:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-264.000	264.000
1998	December 31, 1998	-54.912	54.912
1999	December 31, 1999	-11.422	11.422
2000	December 31, 2000	-3.499	3.499
2001	December 31, 2001

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	-132.000	132.000	500.000 * 52.8 percent	(500.000 * 52.8 percent) * 50 percent
1998	-27.546	27.546	(500.000 - 396.000) * 52.8 percent	(500.000 - 396.000) * 52.8 percent * 50 percent
1999	-5.711	5.711	(500.000 - 478.368) * 52.8 percent	(500.000 - 478.368) * 52.8 percent * 50 percent
2000			500.000 - 495.501 - 1.000
2001

This table explains the requirements for method 48:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 48 for asset lives of 48 life periods.
Balance adjustments	Year-end with annual depreciation Apportioned by period in the year, based on percent
Modified start date	The modified start date is the whole year.
Conventions	Allow depreciation beyond the asset's life, but do not exceed remaining basis. Set the convention to allow two accumulated depreciation accounts and two depreciation expense accounts.
Life year rules	Primary life years 1 to 3 take 52.8 percent of cost. Secondary life years 1 to 3 take 52.8 percent of cost at the rate of 50 percent. Primary life year 4 and onward depreciate remaining basis, including salvage.
Calculations	Primary 52.8 percent. Secondary 52.8 percent of cost at the rate of 50 percent. Remaining basis includes salvage value.
Disposals	Method 48 has no disposal rules.

Primary Secondary Tertiary (Method 49)

For the example that follows, these assumptions apply:

Actual Start Date: May 17, 1997.
Modified Start Date: May 17, 1997.
Cost: 500.000.
Salvage: 10 percent at the end of the asset's life.
Asset Life: 6 years (72 life periods).

This table shows the depreciation of an asset when using depreciation method 49:

Year	End of Year Date	Accumulated Depreciation	Depreciation Expense
1997	December 31, 1997	-156.849	156.849
1998	December 31, 1998	-250.000	250.000
1999	December 31, 1999	-93.151	93.151
2000	December 31, 2000
2001	December 31, 2001
2002	December 31, 2002
2003	December 31, 2003

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	3rd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997				500.000 * .5 * .62739726 (First percent)
1998				500.000 * .5
1999	-156.849	156.849		500.000 * .5 * .37260284 (First percent)	500.000 * .5 * .62739726 (First percent)
2000	-250.000	250.000			500.000 * .5
2001	-93.151	93.151			500.000 * .5 * .37260284 (First percent)
2002	345.068		-345.068		(500.000 - 500.000 - 500.000 - 50.000) * .62739726 (First percent)
2003	204.932		-204.932		(500.000 - 500.000 154.932 + 50.000)

Note. The SDA, SDE1, and SDE2 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts.

This table explains the requirements for method 49:

Requirement	Explanation
Asset life	The demonstration data includes versions of method 4 for asset lives of 72 life periods.
Balance adjustments	Year-end with annual depreciation. Apportioned by period in the year, based on percent.
Modified start date	The modified start date is the actual start date.
Conventions	Set the secondary accounts to allow two accumulated depreciation and three depreciation expense accounts. Set the allow-over depreciation to exceed adjusted basis, but take remaining basis at the end of the life. Set the allow negative depreciation.
Life year rules	Primary rules: depreciate 100 percent of the cost in the first two years of the asset's life. Secondary rules: after the primary has depreciated the cost, depreciate 100 percent of cost. Secondary rules: recover the over-depreciated amount in the last two years to 10 percent of cost.
Calculations	Multiplier with apportionments for start, middle, and end years. Basis (primary and secondary depreciation) includes salvage value.
Disposals	Method 49 has no disposal rules.