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	N/A	N/A	(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	N/A		10.000 - 7.783 - 956 - 1000	N/A

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.

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 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.