Primary Secondary Tertiary (Method 49)
For the example that follows, these assumptions apply:
Actual Start Date: May 17, 1997.
Modified Start Date: May 17, 1997.
Cost: 500.000.
Salvage: 10 percent at the end of the asset's life.
Asset Life: 6 years (72 life periods).
This table shows the depreciation of an asset when using depreciation method 49:
Year |
End of Year Date |
Accumulated Depreciation |
Depreciation Expense |
|---|---|---|---|
1997 |
December 31, 1997 |
-156.849 |
156.849 |
1998 |
December 31, 1998 |
-250.000 |
250.000 |
1999 |
December 31, 1999 |
-93.151 |
93.151 |
2000 |
December 31, 2000 |
N/A |
N/A |
2001 |
December 31, 2001 |
N/A |
N/A |
2002 |
December 31, 2002 |
N/A |
N/A |
2003 |
December 31, 2003 |
N/A |
N/A |
This table shows the second depreciation:
Year |
2nd Accumulated Depreciation |
2nd Depreciation Expense |
3rd Depreciation Expense |
Rule 1 Calculation |
Rule 2 Calculation |
|---|---|---|---|---|---|
1997 |
N/A |
N/A |
N/A |
500.000 *.5 *.62739726 (First percent) |
N/A |
1998 |
N/A |
N/A |
N/A |
500.000 *.5 |
N/A |
1999 |
-156.849 |
156.849 |
N/A |
500.000 *.5 *.37260284 (First percent) |
500.000 *.5 *.62739726 (First percent) |
2000 |
-250.000 |
250.000 |
N/A |
N/A |
500.000 *.5 |
2001 |
-93.151 |
93.151 |
N/A |
N/A |
500.000 *.5 *.37260284 (First percent) |
2002 |
345.068 |
N/A |
-345.068 |
N/A |
(500.000 - 500.000 - 500.000 - 50.000) *.62739726 (First percent) |
2003 |
204.932 |
N/A |
-204.932 |
N/A |
(500.000 - 500.000 154.932 + 50.000) |
The SDA, SDE1, and SDE2 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts.
This table explains the requirements for method 49:
Requirement |
Explanation |
|---|---|
Asset life |
The demonstration data includes versions of method 4 for asset lives of 72 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 actual start date. |
Conventions |
Set the secondary accounts to allow two accumulated depreciation and three depreciation expense accounts. Set the allow-over depreciation to exceed adjusted basis, but take remaining basis at the end of the life. Set the allow negative depreciation. |
Life year rules |
Primary rules: depreciate 100 percent of the cost in the first two years of the asset's life. Secondary rules: after the primary has depreciated the cost, depreciate 100 percent of cost. Secondary rules: recover the over-depreciated amount in the last two years to 10 percent of cost. |
Calculations |
Multiplier with apportionments for start, middle, and end years. Basis (primary and secondary depreciation) includes salvage value. |
Disposals |
Method 49 has no disposal rules. |