Japan Reserve Reduction (Method 39)
For the example that follows, these assumptions apply:
Actual Start Date: May 15, 1997.
Modified Start Date: July 2, 1997.
Cost: 20.000.000 JPY (without tax).
Salvage: 10 percent of cost.
Investment Tax Credit: 10.000.000 JPY (government-subsidized amount for tax depreciation).
Asset Life: 20 years (240 life periods).
These tables show the depreciation of an asset when using depreciation method 39:
Year |
End of Year Date |
Accumulated Depreciation |
Depreciation Expense |
|---|---|---|---|
1997 |
December 31, 1997 |
-1.090.000 |
1.090.000 |
1998 |
December 31, 1998 |
-2.061.190 |
2.061.190 |
1999 |
December 31, 1999 |
-1.836.520 |
1.836.520 |
2000 |
December 31, 2000 |
-1.636.340 |
1.636.340 |
2001 |
December 31, 2001 |
-1.457.979 |
1.457.979 |
... |
N/A |
N/A |
N/A |
2016 |
December 31, 2016 |
-258.176 |
258.176 |
2017 |
December 31, 2017 |
-110.415 |
110.415 |
This table shows the second depreciation:
Year |
2nd Accumulated Depreciation |
2nd Depreciation Expense |
Rule 1 Calculation |
Rule 2 Calculation |
|---|---|---|---|---|
1997 |
-545 |
545 |
20.000.000 * 10.9 percent * (6 / 12) Periods |
20.000.000 - 10.000.000 * 10.9 percent * (6 / 12) Periods |
1998 |
-1.030.595 |
1.030.595 |
(20.000.000 - 1.090.000) * 10.9 percent |
(20.000.000 - 10.000.000 - 545.000) * 10.9 percent |
1999 |
-918.260 |
918.260 |
(20.000.000 - 3.151.190) * 10.9 percent |
(20.000.000 - 10.000.000 - 1.575.595) * 10.9 percent |
2000 |
-818.170 |
818.170 |
(20.000.000 - 4.987.710) * 10.9 percent |
20.000.000 - 10.000.000 - 2.493.855) * 10.9 percent |
2001 |
-728.989 |
728.989 |
(20.000.000- 6.624.050)*10.9 percent |
(20.000.000 - 10.000.000 - 3.312.025) * 10.9 percent |
... |
N/A |
N/A |
N/A |
|
2016 |
-129.088 |
129.088 |
(20.000.000 - 17.631.409) * 10.9 percent |
(20.000.000 - 10.000.000 - 8.815.703) * 10.9 percent |
2017 |
-55.209 |
55.209 |
20.000.000 - 2.000.000-17.889.585 |
20.000.000 - 10.000.000 - 1.000.000 - 8.944.791 |
This table explains the requirements for method 39:
Requirement |
Explanation |
|---|---|
Asset life |
The demonstration data includes versions of method 39 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 998 use a fixed rate percent of 10.9 percent, including accumulated depreciation. Secondary life years 1 to 998 use a fixed rate percent of 10.9 percent, including accumulated depreciation and tax credit. |
Calculations |
Basis times the percent rate of 10.9 percent. Basis includes the salvage value. Secondary formulas include the investment tax credit for the subsidized government amount. |
Disposals |
Method 39 has no disposal rules. |