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 * 60percent
1999	-1.080	1.080	10.000 - 1.000 * 20 percent * (12 / 12) Periods	10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60percent
2000	-1.080	1.080	10.000 - 1.000 * 20 percent * (12 / 12) Periods	10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60percent
2001	-1.080	1.080	10.000 - 1.000 - * 20 percent * (12 / 12) Periods	10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60percent
2002	-540	540	10.000 - 1.000 * 20 percent * (6 / 12) Periods	10.000 - 1.000 * 20 percent * (6 / 12) Periods * 60 percent

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 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.