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	N/A
Asset 2	12.000	N/A
Asset 3	8.000	N/A
Asset 4	15.000	N/A
Asset 5	20.000	N/A
Asset 6	25.000	N/A
1997 Total	90.000	9.000
Asset 7	8.000	N/A
Asset 8	5.000	N/A
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.