Depreciation Methods

Depreciation methods specify how to allocate the asset cost.

You can use:

• Oracle Assets predefined depreciation methods.

• Company-defined depreciation methods you define to accommodate your financial and accounting needs.

Predefined Depreciation Methods

Assets provides the following predefined depreciation methods:

• Straight-Line

• 150 Declining Balance with Straight-Line Switch

• 200 Declining Balance with Straight-Line Switch

• ACRS: Low-Income Foreign

• ACRS: Personal Foreign

• ACRS: Real Foreign Mid-Month Convention

• ACRS: Low-Income

• ACRS: Low-Income Mid-Month Convention

• ACRS: Personal Straight-Line

• ACRS: Real

• ACRS: Real Mid-Month Convention

• ACRS: Real Straight-Line

• ACRS: Real Straight-Line Mid-Month Convention

• Alternative Minimum Tax: Half-Year Convention

• Alternative Minimum Tax: Mid-Quarter Convention

• MACRS: Half-Year Convention

• MACRS: Mid-Quarter Convention

• MACRS: Straight-Line Half-Year Convention

• MACRS: Straight-Line Mid-Month Convention

• MACRS: Straight-Line Mid-Quarter Convention

• Sum of Years Digits

Company-Defined Depreciation Methods

You may need to set up additional depreciation methods other than the predefined methods Assets includes.

This may be required, for example, when you're using a depreciation method already that needs to be modified. You can't modify a depreciation method that's in use, so you need to define a new depreciation method.

You can define the following types of depreciation methods:

Depreciation Method	Description
Calculated (straight-line)	Calculates the annual depreciation rate by dividing the life (in years) into one. Calculated methods spread the asset value evenly over the life of the asset.
Table-based	Calculates the annual depreciation using the depreciation method and life to determine which rate table to use. Then, it uses the prorate period and year of life to determine which of the rates in the table to use.
Flat-rate	Calculates the annual depreciation as the depreciation rate multiplied by the recoverable cost or net book value, multiplied by the fraction of a year the asset was held.

Formula-Based Depreciation Methods

Define formula-based depreciation methods when the existing methods aren't adequate to handle your company's depreciation requirements.

Assets provides predefined variables and functions you use to create formula-based depreciation methods. Any formulas you create are saved for later use.

Note: You must plan and thoroughly test your company-defined depreciation formulas to ensure that your assets will depreciate correctly. Otherwise, company-defined depreciation formulas can cause unexpected and incorrect depreciation rates.

Bonus Depreciation Rules

Use bonus rules to increase the annual depreciation expense for assets in the early years of an asset's life using the following methods:

• Flat-rate

• Straight-line

• Table-based

• Formula-based

A bonus rule can use a different bonus rate for each year of the asset's life.

You can:

• Modify the rate at any time for current and future fiscal years.

• Use bonus rules with corporate books as well as tax books.

• Set up negative bonus rates to amortize bonus reserve.

Note: You can't remove the bonus rule from an asset. You can only change the bonus rule. If the asset isn't required to take additional depreciation then you need to change the bonus rule to another rule with rate of zero.

Depreciable Basis Rules

Assets provides depreciable basis rules to accommodate depreciation method setup requirements that aren't met by the cost or net book value calculation basis types. The combination of the depreciable basis rule and the depreciation method determine how the depreciable basis is derived.