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) |
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. |