Korea Special Rate SL (Method 44)
For the example that follows, these assumptions apply:
Actual Start Date: July 15, 1997.
Modified Start Date: January 1, 1997.
Cost: 500.000 WON (without tax).
Salvage: 1,000 WON.
Asset Life: 4 years (48 life periods).
These tables show the depreciation of an asset when using depreciation method 44:
Year |
End of Year Date |
Accumulated Depreciation |
Depreciation Expense |
|---|---|---|---|
1997 |
December 31, 1997 |
-125.000 |
125.000 |
1998 |
December 31, 1998 |
-125.000 |
125.000 |
1999 |
December 31, 1999 |
-124.000 |
124.000 |
2000 |
December 31, 2000 |
N/A |
N/A |
2001 |
December 31, 2001 |
N/A |
N/A |
This table shows the second depreciation:
Year |
2nd Accumulated Depreciation |
2nd Depreciation Expense |
Rule 1 Calculation |
Rule 2 Calculation |
|---|---|---|---|---|
1997 |
-62.500 |
62.500 |
500.000 * 25 percent |
(500.000 * 25 percent) * 50 percent |
1998 |
-62.500 |
62.500 |
500.000 * 25 percent |
(500.000 * 25 percent) * 50 percent |
1999 |
N/A |
N/A |
500.000 - 250.000 - 125.000 - 1.000 |
N/A |
2000 |
N/A |
N/A |
N/A |
N/A |
2001 |
N/A |
N/A |
N/A |
N/A |
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 by using only primary rules, including the secondary calculations within the primary rule formulas.
This table explains the requirements for method 44:
Requirement |
Explanation |
|---|---|
Asset life |
The demonstration data includes versions of method 44 for asset lives of 48 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 whole year. |
Conventions |
Allow depreciation beyond the asset's life, but do not exceed remaining basis. Set the convention to allow two accumulated depreciation accounts and two depreciation expense accounts. |
Life year rules |
Primary life years 1 to 2 take 25 percent of cost. Secondary life years 1 to 2 take 25 percent of cost at the rate of 50 percent. Primary life year 3 and onward depreciate remaining basis, including salvage. |
Calculations |
Primary 25 percent. Secondary 25 percent of cost at the rate of 50 percent. Basis includes salvage value. |
Disposals |
Method 44 has no disposal rules. |