German Investment Tax Credit (Method 25)

For the example that follows, these assumptions apply:

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	N/A	N/A
2007	December 31, 2007	N/A	N/A

This table shows the second depreciation:

Year	2nd Accumulated Depreciation	2nd Depreciation Expense	Rule 1 Calculation	Rule 2 Calculation
1997	N/A	N/A	100.000 / 3652 * 200 days	N/A
1998	N/A	N/A	(100.000 - 5.476,45) / 3452 * 365 days	N/A
1999	N/A	N/A	(100.00 - 15.470,97) / 3087 * 365 days	N/A
2000	N/A	N/A	(100.000 - 25.465,49) / 2722 * 366 days	N/A
2001	N/A	N/A	(100.000 - 35.487,40) / 2356 * 365 days	N/A
2002	N/A	N/A	(100.000 - 45.481,92) / 1991 * 365 days	N/A
2003	N/A	N/A	(100.000 - 55.476,44) / 1626 * 365 days	N/A
2004	N/A	N/A	(100.000 - 65.470,97) / 1261 * 365 days	N/A
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	N/A	(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.