@depr(vXXXX,"schedule") or @depr(vXXXX,“schedule”, period retirement is in, % of initial investment retired)

Definition

Depreciation

Returns

Calculates depreciation or removes retirements from depreciation expense.

Enables forecasting depreciation against a capital expenditures stream. The basic formula:

@depr (CAPX* stream, * schedule)

where CAPX stream is the depreciating capital expenditure account and schedule is the schedule name defined in the following section Using Debt Scheduler. Enter this formula in v2190.1 or a memo account and the function output is the depreciation for that period's asset.

When depreciating CAPX streams, @depr lags backward. The depreciation in 2003 for a five-year asset is:

  • 2003's CAPX times the first year rate

  • plus 2002's CAPX times the second year rate

  • plus 2001's CAPX times the third year rate, etc.

If a year has no CAPX or the year does not exist, Strategic Finance multiplies zero by a rate.

Because Strategic Finance applies the same rate to all a variable's CAPXs, each asset class should have a CAPX stream. For example, use separate subaccounts of v2170.1 for five-year and ten-year properties.

When depreciating assets for financial and tax reporting purposes, you can use the same CAPX stream, but different schedules and output accounts.

Interim Periods

If you enter assets per quarter, month, or half-year, @depr calculates the annual depreciation for the asset, displaying the amount in the quarter. To calculate each interim period likewise, create schedules.

In years after the year placed in service, Strategic Finance calculates annual depreciation for that asset and allocates to interim periods based on days.

Retirements

To record a retirement, this function records depreciation:

@DEPR(v2170.03, "schedule", 3, 50)
  • v2170.3 (Gross Retirements) is the retirements on assets

  • schedule” is the schedule containing the depreciation rate (e.g. “5 year SL”)

  • (3) is the current year in the schedule (in a half-year convention, five-year properties depreciate in six years). Must be a positive integer.

  • (50) is the depreciation percentage not recognized in the retirement year. Must be between (0) and (100) and applies only in the retirement year. In years after the retirement year, Strategic Finance calculates depreciation no longer recognized. If a method recognizes no depreciation in the retirement year, enter 100.

    Note:

    If modeling the asset sales, model accumulated depreciation on the retired assets.

Total depreciation is calculated by adding all depreciation accounts and subtracting retirements.

Purpose 1: Depreciation

@depr can depreciate capital investments streams using depreciation schedules. The formula should use the account forecasting capital investments (v2170.1.xxx). Enter the exact name of the schedule in quotations.

Example 1:

@depr(v2170.1.010, "Tax: 5 year") 

With the 5 year MACRS depreciation schedule: 20%, 32%, 19.2%, 11.52%, 11.52%, 5.76%. There are six depreciation percentages due to the half-year convention.

V2170.1.010

1998H

1999H

2000F

2001F

2002F

2003F

CAPEX

16

20

30

35

40

45

In the first forecast year, 2000, Strategic Finance takes 19.2% of 1998's investment (from the third period of the schedule), 32% of 1999's 20, 20% of 2000's 30 investment. The answer is 15.28.

Purpose 2: Removing Retirements

When removing assets from service before completely depreciating, remove the asset's portion of the depreciation expense, becauseStrategic Finance depreciates initial investments. Strategic Finance does not know retirements occur in the future and can not adjust accordingly.

@depr can remove the retired portion from the depreciation amount. In @depr, reference the account holding asset retirements (v2170.3.xxx).

Reference the schedule depreciating the assets, enter the number of periods back the retired asset started, and reference the % of the initial investment being removed from the depreciation expense.

Example 2:

@depr(v2170.3.010, "Tax: 5 year", 3, .75)