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.
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. |