Life Year Rules

The basic equation for computing depreciation for a life year consists of a multiplier that is applied to a cost or basis. The resulting amount is subject to a minimum (base) and a maximum (limit). The basis amount that is multiplied might be subject to an overall floor or salvage value. The same rule might apply to multiple life years, or it might apply to a single life year of a cost.

You can define a rule for any asset life year. You can also define a separate rule for the disposal year of an asset.

The formulas that are used by the life year rules can be applied to any element in the depreciation equation, such as:

• Multiplier

• Depreciable basis

• Upper Limit

• Lower Limit

• Salvage value

Asset life years must be contiguous. For example, if the value in the Life Year Thru field for a given Life Year Rule is 1, then the Life Year From value in the subsequent Life Year Rule should be either 1 or 2, depending on whether the Secondary Account Percentage is being used or if In Service Months are specified.

If a depreciation rule uses In Service Months, the same In Service Month should be used consistently for all life years in the depreciation rule. For example, if In Service Months 1 and 2 are used for the first life year of a depreciation rule, then they should also be set up for every year of the depreciation rule. The Life Year From and Life Year Thru values must be the same for a life year that has an In Service Month specified.