Method 08, ACRS Optional Depreciation
If you prefer a slower recovery on the cost of ACRS property than the percentages provided, you might elect to use a straight-line recovery method. This method provides a longer recovery period.
The ACRS optional depreciation method uses one of two methods of computation:
Computation Method |
Description |
---|---|
Inception-to-date (I) |
(((Cost - (Salvage Value)) / (life months)) * (elapsed months)) - (accumulated depreciation) = (period depreciation) For example, depreciation for January 1997 is calculated as follows: (((100,000.00 - 0) / 60) * 6) - 8,333.00 = 1,667.00 |
Remaining life (R) |
((((Net book value) - salvage) / (Remaining life periods))* (months elapsed year-to-date)) - (year-to-date depreciation) = (period depreciation) For example, depreciation for January 1997 is calculated as follows: (((91,667.00 - 0) / 55) * 1) - 0 = 1,667.00 These rules apply to this calculation:
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The calculation for ACRS Optional is the same as Straight Line, except:
The system bases the depreciation calculation on the cost, rather than the adjusted cost (cost less salvage value).
The system uses the mid-year convention for personal property.
The system calculates a full month of depreciation in the month that you acquire the property and no depreciation in the month that you dispose of it for 15-year real property.
The system calculates one-half month of depreciation in the months that you acquire and dispose of 18- and 19-year real property.
If depreciation information is 04 (ACRS method with Basis Reduction), the system reduces the cost by one-half of the Income Tax Credit (ITC) amount that is assigned on Master Information.