Setting Up Life Year Rules
Access the Life Year Rules form.
- Life From
Specify the first asset life year to which the rule pertains. You must set up detail annual rules for a depreciation rule, beginning with year 1 and extending through every year in the life of the asset. The system does not allow gaps between years.
You can set up the detail annual rules beyond the life of the asset. A single record may represent several contiguous years, but the system does not allow duplicate years.
Values are 1 through 998, and 999. Use 999 only to set up a specific rule for the disposal year of an asset.
If you are setting up a 999 life year rule, enter 999 in the Life From and Life Thru fields.
- Life Thru
Specify the last year in the life of an asset to which the rule pertains. You can set up the detail annual rules beyond the life of the asset. Each rule must have a rule for contiguous years beginning with 1. A single record can represent several contiguous years, but the system does not allow duplicate years.
If you are setting up a 999 life year rule, enter 999 in the Life From and Life Thru fields.
- In Service Month
Specify the number that indicates the month that the asset is placed in service. You can specify rules by inclusive ranges. If you leave this field blank, the system continues to use the annual rule for the last specified Placed in Service Month until it finds a higher Placed in Service Month value. The system uses the values you enter in this field as follows:
First, the system searches for an exact match. For example, if an asset is placed in service in month 01, the system looks for a Placed in Service Month value of 01 for that year.
If an exact match does not exist, the system searches for a value of blank.
If a value of blank does not exist, the system continues to use the annual rule for the last specified Placed in Service Month for a range of months until it finds the next highest month you specify.
For example, if you set up annual rules for the Placed in Service Months of 01, 03, 06, and 09, the system uses the rule you specify for 01 during the first and second months, the rule you specify for 03 during the third, fourth, and fifth months, the rule you specify for 06 during the sixth, seventh, and eighth months, and the rule you specify for 09 for the remaining months.
Values are blank, 01, 02, 03, 04, 05, 06, 07, 08, 09, 10, 11, and 12.
- Annual Multiplier
Specify a percentage to use as an element within a formula or by itself. The system applies this percentage to the basis of an asset to derive depreciation. If no basis is defined for the asset, the system applies this percentage to the cost. Enter a value in this field as a decimal. For example, enter 10 percent as .10 and 150 percent as 1.5.
- Spread Pattern
Specify the code for a specific depreciation spread pattern. A pattern determines how the annual depreciation amount is apportioned to periods within a year. You can designate spread patterns for individual years or for a group of years.
- Depreciation Formula
Specify the depreciation formula defined for the multiplier.
- Basis Formula
Specify the depreciation formula defined for the basis.
- Lower Limit Formula
Specify the depreciation formula defined for the Lower Limit.
- Upper Limit Formula
Specify the depreciation formula defined for the Upper Limit.
- Salvage Formula
Specify the depreciation formula defined for Salvage Value.
- Secondary % Continuation (secondary percent continuation)
Specify whether an annual depreciation rule is a primary or secondary rule. Values are:
1: Primary.
2: Secondary.
9: Disposal Year.
If you are setting up a life year rule for disposal year calculations, enter 9 in this field.
These examples use the 999 life year rules that you might need to set up for depreciation rules 1, 3, 4, 5, and 12. Because the setup for both of the ways to address disposal year calculations are nearly the same, the example will focus on the 999 setup.