Declining Balance with a Switch to Straight Line
Declining Balance with a Straight Line Switch performs two simultaneous equations to calculate yearly depreciation. One equation calculates declining balance depreciation and the other calculates straight line depreciation. PeopleSoft Asset Management then compares the two yearly depreciation amounts and applies whichever is greater.
Note that in this type of calculation the asset's net book value is multiplied by the declining balance percentage times the straight line depreciation percentage.
NBV x ((Number of Periods to Depreciate / Life) x DB%)
Declining Balance with a Switch to Straight Line Example
The following table shows data that is used in the depreciation example that follows it.
| Attributes | Data |
|---|---|
|
Asset Cost |
10,000.00 USD |
|
Life |
60 periods (5 years) |
|
Begin Depr Dt. |
07/01/2006 |
|
Declining Balance % |
200% |
Depreciation Results
The following table shows yearly depreciation and the calculation that is used to produce the result.
| Year | Depreciation Calculation | Depreciation Expense |
|---|---|---|
|
2006 |
10,000 x ((6/60) x (200/100)) |
= 2000.00 |
|
2007 |
8000 x ((12/60) x (200/100)) |
= 3200.00 |
|
2008 |
4800 x ((12/60) x (200/100)) |
= 1920.00 |
|
2009 |
2880 x ((12/60) x (200/100)) |
= 1152.00 |
|
2010 x (SL) |
1728 x (12/18) |
= 1152.00 |
|
2011 x (SL) |
576 x (6/6) |
= 576.00 |
In this example, in 2010, the straight line depreciation is greater than the declining balance depreciation. Therefore, switch to straight line depreciation. The declining balance calculation for 2010 is 1728 x ((12/60) x (200/100)) = 691.20. In 2011, the straight line depreciation is equal to the declining balance depreciation.