## Appendix: Understanding International Depreciation Methods

The demonstration data that is included in JD Edwards EnterpriseOne software includes depreciation methods that are designed to meet international requirements. This appendix discusses:

- French straight line (method 19).

- French declining balance (method 20).

- French derogatory (method 21).

- German building (method 22).

- German declining balance (method 23).

- German compound (method 24).

- German investment tax credit (method 25).

- German replacement cost (method 26).

- Italy straight line (method 27).

- Italy anticipated (method 28).

- Italy complete (method 29).

- Spain declining balance (method 30).

- Czech Republic percentage rate (method 31).

- Japan fixed installment (method 32).

- Japan declining balance (method 33).

- Japan beginning special (method 34).

- Japan accelerated (method 35).

- Japan increased (method 36).

- Japan excess (method 37).

- Japan salvage (method 38).

- Japan reserve reduction (method 39).

- Japan composite (method 40).

- Korea straight line (method 41).

- Korea revaluation SL (method 42).

- Korea capital expenditure SL (method 43).

- Korea special rate SL (method 44).

- Korea declining balance (method 45).

- Korea revaluation declining (method 46).

- Korea capital expenditure DB (method 47).

- Korea special rate SL (method 48).

- Primary secondary tertiary (method 49).

### French Straight Line (Method 19)

For the example that follows, these assumptions apply:

- Actual Start Date: June 15, 1997.

- Modified Start Date: June 15, 1997.

- Cost: 100.000 FRF (without tax).

- Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 19:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -10904.11 | 10904.11 | 100.000 / 60*12 * 199 / 365
1998 | December 31, 1998 | -20000.00 | 2000.00 | 100.000 / 60 * 12
1999 | December 31, 1999 | -20000.00 | 2000.00 | 100.000 / 60 * 12
2000 | December 31, 2000 | -20000.00 | 2000.00 | 100.000 / 60 * 12
2001 | December 31, 2001 | -20000.00 | 2000.00 | 100.000 / 60 * 12
2002 | December 31, 2002 | -9095.89 | 9095.89 | 100.000 / 60 * 12 * 166 / 365

Note. Although the asset life is five years, the asset takes six fiscal years to depreciate. The first and last years are split, depending on the actual start date. The number of days in the first year is 200 because it includes the start and end dates. The French straight line method requires 199 days, so one day is subtracted in the formula to calculate the correct apportionment percent for the first year. By default, the last year takes the remaining basis and includes salvage value.

This table explains the requirements for method 19:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 19 for an asset life of 48 life periods and 60 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. This method calculates the initial year percent by the number of days in the first year. Note. Typically, the number of days in a year includes the start day and end day. However, the French straight-line method uses one fewer day. The French requirement is calculated by subtracting one day from the current number of days in the year.
Conventions | The disposal year is the actual disposal date.
Life year rules | Life year 1 to 1 contains the formula that calculates the initial year apportionment. Life years 2 to 4 contain the standard, straight line formula for an annual amount.
Calculations | Formulas calculate a year of straight-line depreciation. The basis includes salvage value.
Disposals | Method 19 has no disposal rules.

### French Declining Balance (Method 20)

For the example that follows, these assumptions apply:

- Actual Start Date: June 15, 1997.

- Modified Start Date: June 1, 1997.

- Cost: 100.000 FRF (without tax).

- Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 20:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -23.333,33 | 23.333,33 | 100.000 * 40 percent / 12*7
1998 | December 31, 1998 | -30.666,66 | 30.666,66 | (100.000-23.333,33) * 40 percent
1999 | December 31, 1999 | -18.400,00 | 18.400,00 | (76.666,67-30.666,66) * 40 percent
2000 | December 31, 2000 | -13.800,00 | 13.800,00 | (46.000,01-18.400,00)/2
2001 | December 31, 2001 | -13.800.00 | 13.800,00 | 13.800,00

Note. Even though the asset life is complete on May 31, 2002, the system calculates depreciation for five complete periods in the fiscal year (December 31, 2001). The calculations for the initial year are based on periods, rather than on days.

This table explains the requirements for method 19:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 20 for an asset life of 36, 48, 60, 72, and 84 life periods.
Balance adjustments | End of the year with annual depreciation Apportioned by period in the year, based on percent
Modified start date | The modified start date is the start of the period. This method calculates the initial year percent by periods in the first year.
Conventions | No conventions are needed.
Life year rules | The first life year is from year 1 to 2 years less than the total number of years. The second life year is for 1 year less than the total number of years. The third life year is for the last year in the asset's life. For example, if the asset has a life of five years, the first life year corresponds to years 1 through 3, the second life year corresponds to year 4, and the third life year corresponds to year 5.
Disposals | Method 20 has no disposal rules.

Calculations

The declining balance is based on a declining coefficient, as illustrated in this table:

Declining Coefficient | Probable Asset Life | Declining Rate
1.5 | 3 and 4 years | 50 and 37.5 percent
2 | 5 and 6 years | 40 and 33.33 percent
2.5 | More than 6 years | 2.5 * life percent

Subtract half of the basis in the year before the total number of years.

Use the remaining basis for calculations.

### French Derogatory (Method 21)

Use the French Derogatory method to calculate the difference between the French Declining Balance method (Method 20) and the French Straight Line method (Method 19). The French Derogatory method requires you to set up these AAIs for depreciation to calculate correctly:

- DSA1 - Use this AAI to retrieve the amount from the AA ledger inception-to date balance from the Asset Account Balances File table (F1202) for the account that is identified on this AAI.

- DSA3 - Use this AAI to retrieve the amount from the D1 ledger inception-to-date balance from table F1202 for the account that is identified on this AAI.

The account that is used for both of the AAIs should be the Accumulated Depreciation account from the Depreciation Default Coding. The AAIs should appear as follows for DSA1 and DSA3:

The French Derogatory method also requires you to set up this depreciation default coding information:

Ledger Type | Depreciation Method
AA | French Straight Line (Method 19)
D1 | French Declining Balance (Method 20)
D3 | French Derogatory (Method 21)

This illustration shows how depreciation default coding should be set up for a cost account that is used for 48 life-month French fixed assets:

When you add assets to this account, the depreciation default information automatically uses these depreciation methods. Ensure that cost amounts are copied from the AA ledger to the D1 and D3 ledgers.

After setup is complete and assets are entered in the system, Method 21 computes the difference between the D1 ledger and the AA ledger. The results of 21 are stored in the D3 ledger.

Note. To compute the depreciation for method 21, you must compute depreciation in final mode for the French Straight Line method and the French Declining Balance. You can compute depreciation for all three ledgers concurrently in final mode.

For the example that follows, these assumptions apply:

- Actual start date: June 15, 1997.

- Modified start date: June 1, 1997.

- Cost: 100.000 FRF (without tax).

- Asset life: 4 years (48 life periods).

This example shows the depreciation of an asset when using depreciation method 21:

Year | End of Year Date | Declining Balance | Straight Line | Derogatory Depreciation
1997 | December 31, 1997 | 28.125 | 17.809 | 10.316
1998 | December 31, 1998 | 26.953 | 25.000 | 1.953
1999 | December 31, 1999 | 22.461 | 25.000 | -2.539
2000 | December 31, 2000 | 22.461 | 25.000 | -2.539
2001 | December 31, 2001 | 0 | 7.191 | -7.191

Note. This example uses the straight-line method in the AA ledger type and the declining balance method in a separate ledger type. The formula uses the calculated final balances to produce the balance adjustments for derogatory depreciation.

Alternatively, you can calculate derogatory depreciation using the JD Edwards EnterpriseOne Report Design Aid tool in one of these ways:

- From the amounts that are computed on the D3 ledger, create a journal entry to the AA ledger for the appropriate offset accounts.

  Use one account for negative amounts, and the other account for positive amounts. The government can provide the company with the necessary statutory account numbers.

- Calculate the difference between the two ledger types, and create journal entries for posting.

This table explains the requirements for method 21:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 21 for an asset life of 48 life periods and 60 life periods.
Balance adjustments | Year-end with annual depreciation Apportioned by period in the year, based on percent Straight-line and declining balance methods must be updated before derogatory depreciation can be calculated.
Modified start date | The modified start date is the start of the period.
Conventions | Allow Over Depreciation is set to option 3 (accumulated depreciation might exceed adjusted basis and continue beyond the asset's life). Negative depreciation is allowed.
Life year rules | The life year from 1 to 998.
Calculations | Calculate the difference between declining balance and straight-line balance.
Disposals | Method 21 has no disposal rules.

### German Building (Method 22)

For the example that follows, these assumptions apply:

- Actual Start Date: March 15, 1997.

- Modified Start Date: March 1, 1997.

- Cost: 3.600.000,00 DEM (without tax).

- Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 22:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31,1997 | -210.000 | 210.000 | 3.600.000 * 7 percent for 10 periods
1998 | December 31, 1998 | -252.000 | 252.000 | 3.600.000 * 7 percent for 12 periods
1999 | December 31, 1999 | -252.000 | 252.000 | 3.600.000 * 7 percent for 12 periods
2000 | December 31, 2000 | -252.000 | 252.000 | 3.600.000 * 7 percent for 12 periods
2001 | December 31, 2001 | -252.000 | 252.000 | 3.600.000 * 7 percent for 12 periods
2002 | December 31, 2002 | -132.000 | 132.000 | 3.600.000 * 7 percent for 2 periods, 3.600.000 * 5 percent for 10 periods
2003 | December 31, 2003 | -108.000 | 108.000 | 3.600.000 * 5 percent for 12 periods
2004 | December 31, 2004 | -108.000 | 108.000 | 3.600.000 * 5 percent for 12 periods
2005 | December 31, 2005 | -108.000 | 108.000 | 3.600.000 * 5 percent for 12 periods
2006 | December 31, 2006 | -108.000 | 108.000 | 3.600.000 * 5 percent for 12 periods
2007 | December 31, 2007 | -132.000 | 132.000 | 3.600.000 * 5 percent for 2 periods, 3.600.000 * 2.5 percent for 10 periods
2008 | December 31, 2008 | -90.000 | 90.000 | 3.600.000 * 2.5 percent for 12 periods
2009-2025 | December 31, 20xx | -90.000 | 90.000 | 3.600.000 * 2.5 percent for 12 periods
2026 | December 31, 2026 | -90.000 | 90.000 | 3.600.000 * 2.5 percent for 12 periods
2027 | December 31, 2027 | -7.500 | 7.500 | 3.600.000 * 2.5 percent for 2 periods

Note. Use the life year reference to force depreciation to be calculated every period.

This table explains the requirements for method 22:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 22 for an asset life of 360 life periods.
Balance adjustments | The depreciation percent changes, based on the asset life year. Use the asset life year reference to force period adjustments.
Modified start date | The modified start date is the start of the period.
Conventions | The life year reference should come from the modified start date.
Life year rules | Asset life years are used, instead of fiscal life years. Life year 1 to 5 takes 7 percent. Life year 6 to 10 takes 3 percent. Life year 11 to 20 takes 2.5 percent.
Calculations | Formulas must use the multiplier times the annual percent. The basis is cost.
Disposals | Method 22 has no disposal rules.

### German Declining Balance (Method 23)

For the example that follows, these assumptions apply:

- Actual Start Date: March 15, 1997.

- Modified Start Date: March 1, 1997.

- Cost: 100.000,00 DEM (without tax).

- Asset Life: 10 years (120 life periods).

This table shows the depreciation of an asset when using depreciation method 23:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -25.000 | 25.000 | 100.000*30 percent * (10/12) periods
1998 | December 31, 1998 | -22.500 | 22.500 | (100.000-25.000) * 30 percent * (12/12) periods
1999 | December 31, 1999 | -15.750 | 15.750 | (100.000-47.500) * 30 percent * (12/12) periods
2000 | December 31, 2000 | -11.025 | 11.025 | (100.000-63.250) * 30 percent * (12/12) periods
2001 | December 31, 2001 | -7.717,5 | 7.717,5 | (100.000-74.275) * 30 percent * (12/12) periods
2002 | December 31, 2002 | -5.402,25 | 5.402,25 | (100.000-89.992,5) * 30 percent * (12/12) periods
2003 | December 31, 2003 | -3.781,58 | 3.781,58 | (100.000-87.394,75) * 30 percent * (12/12) periods
2004 | December 31, 2004 | -2.786,42 | 2.786,42 | (100.000-91.176,33) / (38*12) periods
2005 | December 31, 2005 | -2.786,42 | 2.786,42 | (100.000-93.962,75) / (26*12) periods
2006 | December 31, 2006 | -2.786,43 | 2.786,43 | (100.000-96.749,17) / (14*12) periods
2007 | December 31, 2007 | -464,40 | 464,40 | 100.000-99.353,60 for last 2 periods

Note. The straight line lower limit replaces the declining balance calculation in the eighth year of the asset's life.

This table explains the requirements for method 23:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 23 for an asset life of 120 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 start of the period.
Conventions | No conventions are needed.
Life year rules | Life year 1 to 10 takes 30 percent declining balance.
Calculations | Use 30 percent as a multiplier for the declining balance. The upper limit is three times straight line. The lower limit is straight line.
Disposals | Method 23 has no disposal rules.

### German Compound (Method 24)

For the example that follows, these assumptions apply:

- Actual Start Date: June 12, 1997.

- Modified Start Date: June 1, 1997.

- Cost: 100.000,00 DEM (without tax).

- Asset Life: 12 years (144 life periods).

These tables show the depreciation of an asset when using depreciation method 24:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -4.882,50 | 4.882,50
1998 | December 31, 1998 | -8.327,63 | 8.327,63
1999 | December 31, 1999 | -8.327,63 | 8.327,63
2000 | December 31, 2000 | -8.350,44 | 8.350,44
2001 | December 31, 2001 | -8.327,63 | 8.327,63
2002 | December 31, 2002 | -8.327,63 | 8.327,63
2003 | December 31, 2003 | -8.327,63 | 8.327,63
2004 | December 31, 2004 | -8.350,44 | 8.350,44
2005 | December 31, 2005 | -8.327,63 | 8.327,63
2006 | December 31, 2006 | -8.327,63 | 8.327,63
2007 | December 31, 2007 | -8.327,62 | 8.327,62
2008 | December 31, 2008 | -8.350,44 | 8.350,44
2009 | December 31, 2009 | -3.445,13 | 3.445,13

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 | -7.328,77 | 7.328,77 | 100.000 / 4383 * 214 days | 100.00 * 12.5 percent * 58.630, 13 Initial Year percent
1998 | -12.500,00 | 12.500,00 | (100.000 - 4.882,5) / 4169 * 365 days | 100.000 * 12.5 percent
1999 | -12.500,00 | 12.500,00 | (100.000-13.215,13 / 3804 * 365 days | 100.00 * 12.5 percent
2000 | -12.500,00 | 12.500,00 | (100.000 - 21.537,76) / 3439 * 366 days | 100.00 * 12.5 percent
2001 | -5.171,23 | 5.171,23 | (100.000 - 29.888,20) / 3073 * 365 days | 100.00 * 12.5 percent * 41.369, 87 Last Year percent
2002 |  |  | (100.000 - 38.215,83) / 2708 * 365 days |
2003 |  |  | (100.000 - 46.543,46) / 2343 * 365 days |
2004 |  |  | (100.000 - 54.871,09) / 1978 * 366 days |
2005 |  |  | (100.000 - 63.221,54) / 1612 * 365 days |
2006 |  |  | (100.000 - 71.549,17) / 1247 * 365 days |
2007 |  |  | (100.000 - 79.876,80) / 882 * 365 days |
2008 |  |  | (100.000 - 88.204,43) / 517 * 366 days |
2009 |  |  | (100.000 - 96.554,87) / 151 * 151 days |

Note. The compound 50 percent is apportioned over five fiscal years. The first and last year have an apportionment percent combined of 100 percent to allow four years of 12.5 percent compound depreciation. Continuing depreciation beyond the asset's life is needed, so remaining basis is not taken in the last year of the asset's life, which reverses the compound depreciation. AAIs (SDA and SDE1) for secondary accounts were set up.

This table explains the requirements for method 24:

Requirement | Explanation
Asset life | The demonstration data includes a version of method 24 for an asset life of 144 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 start of the period.
Conventions | Secondary Accounts are set to two accumulated depreciation accounts and two depreciation expense accounts. Allow Over Depreciation is set to exceed adjusted basis and to continue beyond the asset's life.
Life year rules | Life years 1 to 998 take straight line for rule 1. The demonstration data includes examples for 50 percent over the first four years and for 50 percent in the first year. Different rules for the first, middle, and last years control the life year percent that matches the fiscal year.
Calculations | Remaining number of days are used for straight line. An annual rule multiplier is used for the secondary 50 percent.
Disposals | Method 24 has no disposal rules.

### German Investment Tax Credit (Method 25)

For the example that follows, these assumptions apply:

- Actual Start Date: June 15, 1997.

- Modified Start Date: June 15, 1997.

- Cost: 100.000,00 DEM (without tax).

- Asset Life: 10 years (120 life periods).

These tables show the depreciation of an asset when using depreciation method 25:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -5.476,45 | 5.476,45
1998 | December 31, 1998 | -9.994,52 | 9.994,52
1999 | December 31, 1999 | -9.994,52 | 9.994,52
2000 | December 31, 2000 | -10.021,91 | 10.021,91
2001 | December 31, 2001 | -9.994,52 | 9.994,52
2002 | December 31, 2002 | -9.994,52 | 9.994,52
2003 | December 31, 2003 | -9.994,53 | 9.994,53
2004 | December 31, 2004 | -10.021,91 | 10.021,91
2005 | December 31, 2005 | -4.507,12 | 4.507,12
2006 | December 31, 2006 |  |
2007 | December 31, 2007 |  |

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 |  |  | 100.000 / 3652 * 200 days |
1998 |  |  | (100.000 - 5.476,45) / 3452 * 365 days |
1999 |  |  | (100.00 - 15.470,97) / 3087 * 365 days |
2000 |  |  | (100.000 - 25.465,49) / 2722 * 366 days |
2001 |  |  | (100.000 - 35.487,40) / 2356 * 365 days |
2002 |  |  | (100.000 - 45.481,92) / 1991 * 365 days |
2003 |  |  | (100.000 - 55.476,44) / 1626 * 365 days |
2004 |  |  | (100.000 - 65.470,97) / 1261 * 365 days |
2005 | -8.156,42 | 8.156,42 | 100.000 - 20.000- 75.492,88 | 20.000 / 895 * 365 days
2006 | -8.156,43 | 8.156,43 | (100.000 - 35.487,40) / 2356 * 365 days | (20.000 - 8.156,42) / 530 * 365 days
2007 | -3.687,15 | 3.687,15 |  | (20.000 - 16.312,85) / 165 * 165 days

Note. Remaining basis uses the investment tax credit as a salvage value to stop depreciating. AAIs (SDA and SDE1) for secondary accounts were set up.

This table explains the requirements for method 25:

Requirement | Explanation
Asset life | The demonstration data includes a version of method 25 for an asset life of 120 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 | Secondary Accounts are set to two accumulated depreciation accounts and to two depreciation expense accounts. Allow Over Depreciation is set to not exceed adjusted basis and continue beyond the asset's life. Disposal Conventions is set to the actual disposal date.
Life year rules | Life years 1 to 998 take straight line for rule 1 with Investment Tax Credit as part of salvage. Start depreciating the Investment Tax Credit in a separate account in the eighth year.
Calculations | Remaining number of days are used for straight line. Remaining number of days are used for straight line of the Investment Tax Credit, which is used as basis.
Disposals | Method 25 has no disposal rules.

### German Replacement Cost (Method 26)

For the example that follows, these assumptions apply:

- Actual Start Date: June 15, 1997.

- Modified Start Date: June 1, 1997.

- Cost: 100.000,00 DEM (without tax).

- Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 26:

Year | End of Year Date | GL Statistic | Accumulated Depreciation | Depreciation Expense | Rule 1 Calculation
1997 | December 31, 1997 | 95.000 | -10.000 | 10.000 | 100.00 / 95.000 * 95.000
1998 | December 31, 1998 | 90.000 | -9.473,68 | 9.473,68 | 100.00 / 95.000 * 90.000
1999 | December 31, 1999 | 85.000 | -8.947,37 | 8.947,37 | 100.00 / 95.000 * 85.000
2000 | December 31, 2000 | 80.000 | -8.421,05 | 8.421,05 | 100.00 / 95.000 * 80.000
2001 | December 31, 2001 | 75.000 | -7.894,74 | 7.894,74 | 100.00 / 95.000 * 75.000
2002 | December 31, 2002 | 70.000 | -7.368,42 | 7.368,42 | 100.00 / 95.000 * 70.000

Note. The AAI (DS4) must be set up for the GL Statistic. The GL Statistic must come from the AU ledger type. Other ledger types can be retrieved with elements from both Asset Account Balances File table (F1202) and the Account Balances table (F0902) balances. The calculation can continue beyond the asset's life.

This table explains the requirements for method 26:

Requirement | Explanation
Asset life | The demonstration data includes a version of method 26 for an asset life of 60 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 start of the period.
Conventions | Allow Over Depreciation is set to not exceed adjusted basis and continue beyond the asset's life.
Life year rules | Life years 1 to 998 use the formula calculation.
Calculations | Use the cost divided by the insurance value and multiplied by the GL Actual Unit Statistic.
Disposals | Method 26 has no disposal rules.

### Italy Straight Line (Method 27)

For the example that follows, these assumptions apply:

- Actual Start Date: April 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 10.000.000 ITL (without tax).

- Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 27:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 |  | 2.000.000 | 10.000.000 / 60 / 12
1998 | December 31, 1998 | -2.000.000 | 2.000.000 | 10.000.000 / 60 / 12
1999 | December 31, 1999 | -2.000.000 | 2.000.000 | 10.000.000 / 60 / 12
2000 | December 31, 2000 | -2.000.000 | 2.000.000 | 10.000.000 / 60 / 12
2001 | December 31, 2001 | -2.000.000 | 2.000.000 | 10.000.000 / 60 / 12

Note. Because the asset's life starts at the beginning of the fiscal year, the asset is fully depreciated in five complete years.

This table explains the requirements for method 27:

Requirement | Explanation
Asset life | The demonstration data includes a version of method 27 for an asset life of 36, 60, and 120 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 whole year.
Conventions | No conventions are needed.
Life year rules | Life year 1 to the year-end of the asset
Calculations | Formulas calculate a year of straight line depreciation for the whole year. Basis includes the salvage value.
Disposals | Method 27 has no disposal rules.

### Italy Anticipated (Method 28)

For the example that follows, these assumptions apply:

- Actual Start Date: April 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 10.000.000 ITL (without tax).

- Asset Life: 4 years (48 life periods).

These tables show the depreciation of an asset when using depreciation method 28:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -1.500.000 | 1.500.000
1998 | December 31, 1998 | -1.500.000 | 1.500.000
1999 | December 31, 1999 | -1.500.000 | 1.500.000
2000 | December 31, 2000 | -1.000.000 | 1.000.000

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 | -1.500.000 | 1.500.000 | 10.000.000 * 15 percent | 10.000.000 * 15 percent
1998 | -1.500.000 | 1.500.000 | 10.000.000 * 15 percent | 10.000.000 * 15 percent
1999 | -1.500.000 | 1.500.000 | 10.000.000 * 15 percent | 10.000.000 * 15 percent
2000 |  |  | 10.000.000 -30.000.00 -30.000.00 |

Note. The AAIs (SDA and SDE1) need to be set up for the secondary accounts. Other variations of the anticipated life-year percent are set up with method 28.

This table explains the requirements for method 28:

Requirement | Explanation
Asset life | The demonstration data includes a version of method 28 for an asset life of 48 life periods at 15 percent, 48 life periods at 20 percent, 60 life periods at 30 percent, and 84 life periods at 10 percent.
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 whole year.
Conventions | Secondary Accounts are set to two accumulated depreciation accounts and to two depreciation expense accounts. Allow Over Depreciation is set to not exceed adjusted basis and continue beyond the asset's life.
Life year rules | Life year 1 to 3 times 15 percent. Life year 4 takes the remaining basis in the primary rule (through year 998).
Calculations | Multiply cost by 15 percent. Basis includes the salvage value.
Disposals | Method 28 has no disposal rules.

### Italy Complete (Method 29)

For the example that follows, these assumptions apply:

- Actual Start Date: April 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 10.000.000 ITL (without tax).

- Asset Life: 1 year (12 life periods).

This table shows the depreciation of an asset when using depreciation method 29:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -10.000.000 | 10.000.000 | 10.000.000

Note. The requirement to depreciate only assets with a cost under 1.000.000 lira can be done with data selection that is less than the amount in the Asset Account Balance File table (F1202) for Year to Date Amount (FLAPYN) or the Balance Forward (FLAPYC).

This table explains the requirements for method 29:

Requirement | Explanation
Asset life | The demonstration data includes a version of method 29 for an asset life of 12 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 whole year.
Conventions | No conventions are needed.
Life Year Rules | Life year 1 to 1
Calculations | Fully depreciate cost. Basis includes the salvage value.
Disposals | Method 29 has no disposal rules.

### Spain Declining Balance (Method 30)

For the example that follows, these assumptions apply:

- Actual Start Date: July 11, 1997.

- Modified Start Date: July 11, 1997.

- Cost: 10.000.000 ESP (without tax).

- Asset Life: 6.66 years (72 life periods).

This table shows the depreciation of an asset when using depreciation method 30:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -1.430.137 | 1.430.137 | 10.000.000 * 30 percent * (174 / 365) Days
1998 | December 31, 1998 | -2.570.959 | 2.570.959 | (10.000.000 - 1.430.137 * 30 percent
1999 | December 31, 1999 | -1.799.671 | 1.799.671 | (10.000.000 - 4.001.096) * 30 percent
2000 | December 31, 2000 | -1.259.770 | 1.259.770 | (10.000.000 - 5.800.7670 * 30 percent
2001 | December 31, 2001 | -881.839 | 881.839 | (10.000.000 - 7.060.537) * 30 percent
2002 | December 31, 2002 | -617.287 | 617.287 | (10.000.000 - 7.942.376 * 30 percent
2003 | December 31, 2003 | -1.440.337 | 1.440.337 | 10.000.000 - 8.559.663

Note. Life year 7 automatically depreciates to remaining basis.

This table explains the requirements for method 30:

Requirement | Explanation
Asset life | The demonstration data includes a version of method 30 for an asset life 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, next period date, or start of period.
Conventions | Disposal convention is the actual disposal date with the actual start date.
Life year rules | Life year 1 to 1 declining balance with initial year apportionment. Life year 2 to 6 declining balance. Life year 7 is remaining basis.
Calculations | Declining balance of 30 percent. Basis includes the salvage value.
Disposals | Method 30 has no disposal rules.

### Czech Republic Percentage Rate (Method 31)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 90.000 CSK (without tax).

- Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 31:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -12.780 | 12.780 | 90.000 * 14.2 percent * (12 / 12) Periods in Year
1998 | December 31, 1998 | -25.740 | 25.740 | 90.000 * 28.6 percent * (12 / 12) Periods in Year
1999 | December 31, 1999 | -25.740 | 25.740 | 90.000 * 28.6 percent * (12 / 12) Periods in Year
2000 | December 31, 2000 | -25.740 | 25.740 | 90.000 * 28.6 percent * (12 / 12) Periods in Year
2001 | December 31, 2001 |  |  | 90.000 - 90.000

Note. The compute direction by period uses the life year reference to calculate the percent rate based on the asset's life and not a fiscal year. The compute direction for current year calculates the percent rate based on a fiscal year and apportions the first year differently, depending on the start date of the asset. The five-year methods apply a different percent rate in later years.

This table explains the requirements for method 31:

Requirement | Explanation
Asset life | The demonstration data includes a version of method 31 for an asset life of 48 and 60 life periods.
Balance adjustments | Year-end with annual depreciation Apportioned by period in the year, based on percent Period with life year reference
Modified start date | The modified start date is the whole year, midyear, or start of period.
Conventions | No conventions are needed for current year compute direction. Disposal convention is set for the midyear modified start date. Life year reference is needed for compute direction by period.
Life year rules | Life year 1 to 1, including initial year apportionment. Life year 2 to 4 percent rate. Life year 5 is remaining basis.
Calculations | Basis times the percent rate of 14.2 for the 1st year and 28.6 for every year thereafter. Basis includes the salvage value.
Disposals | Method 31 has no disposal rules.

### Japan Fixed Installment (Method 32)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: July 2, 1997.

- Cost: 10.000 JPY (without tax).

- Salvage: 10 percent of cost.

- Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 32:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -900 | 900 | 9.000 * 20 percent * (6 / 12) Periods in Year
1998 | December 31, 1998 | -1.800 | 1.800 | 9.000 * 20 percent * (12 / 12) Periods in Year
1999 | December 31, 1999 | -1.800 | 1.800 | 9.000 * 20 percent * (12 / 12) Periods in Year
2000 | December 31, 2000 | -1.800 | 1.800 | 9.000 * 20 percent * (12 / 12) Periods in Year
2001 | December 31, 2001 | -1.800 | 1.800 | 9.000 * 20 percent * (12 / 12) Periods in Year
2002 | December 31, 2002 | -900 | 900 | 10.000 - 8.100 + 1.000

Note. The years for a five-year asset overlap into a sixth fiscal year due to the initial term of apportionment.

This table explains the requirements for method 32:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 32 for an asset life of 60 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 midyear, start of period, or half-year.
Conventions | Disposal conventions are set for modified start dates of midyear and half-year.
Life year rules | Life year 1 to 5 at a fixed rate percent. Life year 6 is remaining basis.
Calculations | Basis times the percent rate of 20 percent. Basis includes the salvage value.
Disposals | Method 32 has no disposal rules.

### Japan Declining Balance (Method 33)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: July 2, 1997.

- Cost: 10.000 JPY (without tax).

- Salvage: 10 percent of cost.

- Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 33:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -1.845 | 1.845 | 10.000 * 36.9 percent * (6 / 12) Periods in Year
1998 | December 31, 1998 | -3.009 | 3.009 | (10.000 - 1.845) * 36.9 percent * (12 / 12) Periods in Year
1999 | December 31, 1999 | -1.899 | 1.899 | (10.000 - 4.854) * 36.9 percent * (12 / 12) Periods in Year
2000 | December 31, 2000 | -1.198 | 1.198 | (10.000 - 6.753 * 36.9 percent * (12 / 12) Periods in Year
2001 | December 31, 2001 | -756 | 756 | (10.000 - 7.951 * 36.9 percent * (12 / 12) Periods in Year
2002 | December 31, 2002 | -293 | 293 | 10.000 - 8.707 + 1.000

Note. The years for a five-year asset overlap into a sixth fiscal year due to the initial term of apportionment.

This table explains the requirements for method 33:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 33 for an asset life of 60 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 midyear, start of period, or half-year.
Conventions | Disposal conventions are set for modified start dates of midyear and half year.
Life year rules | Life year 1 to 5 at a fixed rate percent. Life year 6 is remaining basis, including salvage.
Calculations | Basis times the percent rate of 36.9 percent, including accumulated depreciation. Basis includes the salvage value.
Disposals | Method 33 has no disposal rules.

### Japan Beginning Special (Method 34)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: July 2, 1997.

- Cost: 10.000 JPY (without tax).

- Salvage: 10 percent of cost.

- Asset Life: 5 years (60 life periods).

These tables show the depreciation of an asset when using depreciation method 34:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -1.845 | 1.845
1998 | December 31, 1998 | -2.456 | 2.456
1999 | December 31, 1999 | -1.549 | 1.549
2000 | December 31, 2000 | -978 | 978
2001 | December 31, 2001 | -617 | 617
2002 | December 31, 2002 | -55 | 55

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 | -1.500 | 1.500 | 10.000 * 36.9 percent (6 / 12) Periods | 10.000*15 percent
1998 |  |  | 10.000 * 36.9 percent * (12 / 12) Periods |
1999 |  |  | (10.000 - 5.801) * 36.9 percent * (12 / 12) Periods |
2000 |  |  | (10.000 - 7.350) * 36.9 percent * (12 / 1) Periods |
2001 |  |  | (10.000 - 8.328) * 36.9 percent * (12 / 12) Periods |
2002 |  |  | (10.000 - 8.945) - 1.000 |

This example uses primary and secondary rules. The demonstration data also includes a version using primary rules only. The primary and secondary rules use current year to date. The primary rules use only remaining compute direction.

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts. These calculations can be done using only primary rules by including the secondary calculations within the primary rule formulas.

This table explains the requirements for method 34:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 34 for an asset life of 60 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 midyear, start of period, or half-year.
Conventions | The secondary account percent is set to allow two accumulated depreciation accounts and two depreciation expense accounts. The disposal convention matches the midyear and half-year initial term apportionment.
Life year rules | Life year 1 to 5 at a fixed rate percent. Secondary rule 1 to 1 takes an extra 15 percent the first year. Life year 6 is remaining basis (primary and secondary accounts), including salvage.
Calculations | Basis times the percent rate of 36.9 percent, including accumulated depreciation. Basis includes the salvage value.
Disposals | Method 34 has no disposal rules.

### Japan Accelerated (Method 35)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: July 2, 1997.

- Cost: 10.000 JPY (without tax).

- Salvage: 10 percent of cost.

- Asset Life: 7 years (84 life periods).

These tables show the depreciation of an asset when using depreciation method 35:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -1.400 | 1.400
1998 | December 31, 1998 | -2.337 | 2.337
1999 | December 31, 1999 | -1.572 | 1.572
2000 | December 31, 2000 | -1.057 | 1.057
2001 | December 31, 2001 | -714 | 714
2002 | December 31, 2002 | -484 | 484
2003 | December 31, 2003 | -244 | 244

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 | -252 | 252 | 10.000 * 28 percent * (6 / 12) Periods | 10.000 * 28 percent * (6 / 12) Periods * 18 percent
1998 | -397 | 397 | (10.000 - 1.400 - 252) * 28 percent * (12 / 12) Periods * 17 percent | (10.000 - 1.400 - 252) * 28 percent * (12 / 12) Periods * 17 percent
1999 | -267 | 267 | (10.000 - 3.737 - 649) * 28 percent * (12 / 12) Periods | (10.000 - 3.737 - 649) * 28 percent * (12 / 12) Periods * 17 percent
2000 | -169 | 169 | (10.000 - 5.309 - 916) * 28 percent * (12 / 12) Periods | (10.000 - 5.309 - 916) * 28 percent * (12 / 12) Periods * 16 percent
2001 | -107 | 107 | (10.000 - 6.366 - 1.085) * 28 percent * (12 / 12) Periods | (10.000 - 6.366 - 1.085) * 28 percent * (12 / 12) Periods * 15 percent
2002 |  |  | (10.000 - 7.080 - 1.192) * 28 percent * (12 / 12) Periods |
2003 |  |  | 10.000 - 7.564 - 1.192 - 1000 |

This example uses primary and secondary rules. The demonstration data also includes a version using primary rules only. The primary and secondary rules use current year to date. The primary rules use only remaining compute direction.

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts. These calculations can be done using only primary rules by including the secondary calculations within the primary rule formulas.

This table explains the requirements for method 35:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 35 for an asset life of 84 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 midyear, start of period, or half-year.
Conventions | The secondary account percent is set to allow two accumulated depreciation accounts and two depreciation expense accounts. The disposal convention matches the midyear and half-year initial term apportionment.
Life year rules | Primary rule life year 1 to 6 at a declining rate of 28 percent. Primary rule life year 7 is remaining basis (primary and secondary accounts), including salvage. Secondary rule life year 1 takes 18 percent of the declining balance. Secondary rule life years 2 to 3 take 17 percent of the declining balance. Secondary rule life year 4 takes 16 percent of the declining balance. Secondary rule life year 5 takes 15 percent of the declining balance.
Calculations | Basis times the percent rate of 28 percent, including accumulated depreciation. Basis includes the salvage value.
Disposals | Method 35 has no disposal rules.

### Japan Increased (Method 36)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: July 2, 1997.

- Cost: 10.000 JPY (without tax).

- Salvage: 10 percent of cost.

- Asset Life: 7 years (84 life periods).

These tables show the depreciation of an asset when using depreciation method 36:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -1.400 | 1.400
1998 | December 31, 1998 | -2.353 | 2.353
1999 | December 31, 1999 | -1.579 | 1.579
2000 | December 31, 2000 | -1.137 | 1.137
2001 | December 31, 2001 | -785 | 785
2002 | December 31, 2002 | -529 | 529
2003 | December 31, 2003 | -261 | 261

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 | -196 | 196 | 10.000 * 28 percent * (6 / 12) Periods | 10.000 * 28 percent * (6 / 12) Periods * 14 percent
1998 | -412 | 412 | (10.000 - 1.400 - 196) * 28 percent * (12 / 12) Periods | (10.000 - 1.400 - 196) * 28 percent * (12 / 12) Periods * 17.5 percent
1999 |  |  | (10.000 - 3.737 - 649) * 28 percent * (12 / 12) Periods | < 10 percent
2000 | -119 | 119 | (10.000 - 5.332 - 608) * 28 percent * (12 / 12) Periods | (10.000 - 5.332 - 608) * 28 percent * (12 / 12) Periods * 10.5 percent
2001 | -130 | 130 | (10.000 - 6.469 - 727) * 28 percent * (12 / 12) Periods | (10.000 - 6.469 - 727) * 28 percent * (12 / 12) Periods * 16.62 percent
2002 | -99 | 99 | (10.000 - 7.254 - 857) * 28 percent * (12 / 12) Periods | (10.000 - 7.254 - 857) * 28 percent * (12 / 12) Periods * 18.72 percent
2003 |  |  | 10.000 - 7.783 - 956 - 1000 |

This example uses primary and secondary rules. The demonstration data also includes a version using primary rules only. The primary and secondary rules use current year-to-date. The primary uses only remaining compute direction.

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts. These calculations can be done using only primary rules by including the secondary calculations within the primary rule formulas.

This table explains the requirements for method 36:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 36 for an asset life of 84 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 midyear, start of period, or half-year.
Conventions | The secondary account percent is set to allow two accumulated depreciation accounts and two depreciation expense accounts. The disposal convention matches the midyear and half-year initial term apportionment.
Life year rules | Primary rule life years 1 to 6 at a declining rate of 28 percent. Primary rule life year 7 is remaining basis (primary and secondary accounts), including salvage. Secondary rule life year 1 takes 14 percent of the declining balance. Secondary rule life year 2 takes 17.5 percent of the declining balance. Secondary rule life year 3 takes 7 percent; but since it is less than 10 percent, no balances are adjusted. Secondary rule life year 4 takes 10.5 percent of the declining balance. Secondary rule life year 5 takes 16.2 percent of the declining balance. Secondary rule life year 6 takes 18.72 percent of the declining balance.
Calculations | Basis times the percent rate of 28 percent including accumulated depreciation. Basis includes the salvage value.
Disposals | Method 36 has no disposal rules.

### Japan Excess (Method 37)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: July 2, 1997.

- Cost: 10.000 JPY (without tax).

- Salvage: 10 percent of cost.

- Asset Life: 5 years (60 life periods).

These tables show the depreciation of an asset when using depreciation method 37:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -900 | 900
1998 | December 31, 1998 | -1.800 | 1.800
1999 | December 31, 1999 | -1.800 | 1.800
2000 | December 31, 2000 | -1.800 | 1.800
2001 | December 31, 2001 | -1.800 | 1.800
2002 | December 31, 2002 | -900 | 900

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 | -540 | 540 | 10.000 - 1.000 * 20 percent * (6 / 12) Periods * 60 percent | 10.000 - 1.000 * 20 percent * (6 / 12) Periods * 60 percent
1998 | -1.080 | 1.080 | 10.000 - 1.000 * 20 percent * (12 / 12) Periods | 10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60 percent
1999 | -1.080 | 1.080 | 10.000 - 1.000 * 20 percent * (12 / 12) Periods | 10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60 percent
2000 | -1.080 | 1.080 | 10.000 - 1.000 * 20 percent * (12 / 12) Periods | 10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60 percent
2001 | -1.080 | 1.080 | 10.000 - 1.000 - * 20 percent * (12 / 12) Periods | 10.000 - 1.000 * 20 percent * (12 / 12) Periods * 60 percent
2002 | -540 | 540 | 10.000 - 1.000 * 20 percent * (6 / 12) Periods | 10.000 - 1.000 * 20 percent * (6 / 12) Periods * 60 percent

This example uses primary and secondary rules. The demonstration data also includes a version using primary rules only. The primary and secondary rules use current year-to-date. The primary rules use only remaining compute direction.

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts. These calculations can be done using only primary rules by including the secondary calculations within the primary rule formulas.

This table explains the requirements for method 37:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 37 for an asset life of 60 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 midyear, start of period, or half-year.
Conventions | The secondary account percent is set to allow two accumulated depreciation accounts and two depreciation expense accounts. The disposal convention matches the midyear and half-year initial term apportionment.
Life year rules | Primary rule life years 1 to 5 at a declining rate of 20 percent. Primary rule life year 6 is remaining basis of the primary accounts, including salvage. Secondary rule life year 1 to 5 take 60 percent at a declining rate of 20 percent. Secondary rule life year 6 takes 60 percent of the remaining basis of the primary account, including salvage.
Calculations | Basis times the percent rate of 20 percent including accumulated depreciation. Basis includes the salvage value.
Disposals | Method 37 has no disposal rules.

### Japan Salvage (Method 38)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: July 2, 1997.

- Cost: 10.000 JPY (without tax).

- Salvage: 5 percent of cost.

- Asset Life: 5 years (60 life periods).

This table shows the depreciation of an asset when using depreciation method 38:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -1.845 | 1.845 | 10.000 * 36.9 percent * (6 / 12) Periods
1998 | December 31, 1998 | -3.009 | 3.009 | (10.000 - 1.845) * 36.9 percent
1999 | December 31, 1999 | -1.899 | 1.899 | (10.000 - 4.854) * 36.9 percent
2000 | December 31, 2000 | -1.198 | 1.198 | (10.000 - 6.753) * 36.9 percent
2001 | December 31, 2001 | -756 | 756 | (10.000 - 7.951) * 36.9 percent
2002 | December 31, 2002 | -477 | 477 | (10.000 - 8.707) * 36.9 percent
2003 | December 31, 2003 | -301 | 301 | (10.000 - 9.184 * 36.9 percent
2004 | December 31, 2004 | -15 | 15 | (10.000 - 9.485) - 500

This example stops at 5 percent of cost with the current year compute direction. The demonstration data also includes a depreciation version to 1 yen past the 5 percent salvage value, using the remaining compute direction.

Note. Depreciation to 1 yen can be accomplished by using remaining compute direction. The asset's life is 5 years, but depreciation of salvage continues beyond the asset's life.

This table explains the requirements for method 38:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 38 for an asset life of 60 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 midyear, start of period, or half-year.
Conventions | Disposal conventions are set for the modified start dates of midyear and half-year. Set the convention to allow depreciation beyond the asset life but not to exceed remaining basis.
Life year rules | Life year 1 to 1 uses a fixed rate percent of 36.9 percent with the initial periods apportionment. Life years 2 to 8 uses fixed rate percent of 36.9. Life years 9 to 10 uses formulas to depreciate the 5 percent of salvage for three years (DIR1 = Remaining). Life years 11 and onward depreciate to remaining basis of 1 year (DIR1 = Remaining).
Calculations | Basis times the percent rate of 36.9 percent. Basis includes the salvage value.
Disposals | Method 38 has no disposal rules.

### Japan Reserve Reduction (Method 39)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: July 2, 1997.

- Cost: 20.000.000 JPY (without tax).

- Salvage: 10 percent of cost.

- Investment Tax Credit: 10.000.000 JPY (government-subsidized amount for tax depreciation).

- Asset Life: 20 years (240 life periods).

These tables show the depreciation of an asset when using depreciation method 39:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -1.090.000 | 1.090.000
1998 | December 31, 1998 | -2.061.190 | 2.061.190
1999 | December 31, 1999 | -1.836.520 | 1.836.520
2000 | December 31, 2000 | -1.636.340 | 1.636.340
2001 | December 31, 2001 | -1.457.979 | 1.457.979
... |  |  |
2016 | December 31, 2016 | -258.176 | 258.176
2017 | December 31, 2017 | -110.415 | 110.415

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 | -545 | 545 | 20.000.000 * 10.9 percent * (6 / 12) Periods | 20.000.000 - 10.000.000 * 10.9 percent * (6 / 12) Periods
1998 | -1.030.595 | 1.030.595 | (20.000.000 - 1.090.000) * 10.9 percent | (20.000.000 - 10.000.000 - 545.000) * 10.9 percent
1999 | -918.260 | 918.260 | (20.000.000 - 3.151.190) * 10.9 percent | (20.000.000 - 10.000.000 - 1.575.595) * 10.9 percent
2000 | -818.170 | 818.170 | (20.000.000 - 4.987.710) * 10.9 percent | 20.000.000 - 10.000.000 - 2.493.855) * 10.9 percent
2001 | -728.989 | 728.989 | (20.000.000- 6.624.050)*10.9 percent | (20.000.000 - 10.000.000 - 3.312.025) * 10.9 percent
... |  |  |  |
2016 | -129.088 | 129.088 | (20.000.000 - 17.631.409) * 10.9 percent | (20.000.000 - 10.000.000 - 8.815.703) * 10.9 percent
2017 | -55.209 | 55.209 | 20.000.000 - 2.000.000-17.889.585 | 20.000.000 - 10.000.000 - 1.000.000 - 8.944.791

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The secondary rules could be set up as primary rules so that only the subsidized tax amount is depreciated.

This table explains the requirements for method 39:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 39 for an asset life of 240 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 midyear, start of period, or half year.
Conventions | Disposal conventions are set for the modified start dates of midyear and half-year. Set the convention to allow depreciation beyond the asset life and to exceed remaining basis.
Life year rules | Primary life years 1 to 998 use a fixed rate percent of 10.9 percent, including accumulated depreciation. Secondary life years 1 to 998 use a fixed rate percent of 10.9 percent, including accumulated depreciation and tax credit.
Calculations | Basis times the percent rate of 10.9 percent. Basis includes the salvage value. Secondary formulas include the investment tax credit for the subsidized government amount.
Disposals | Method 39 has no disposal rules.

### Japan Composite (Method 40)

Use a parent asset to group the assets as a composite. The cost accounts need to be the same for each parent composite group. No other assets should be booked to the composite cost account, except for assets within the composite. The general ledger cost balance is used in the depreciation calculation.

These tables show the depreciation of an asset when using depreciation method 40:

Parent Composite | Cost | Salvage
Asset 1 | 10.000 |
Asset 2 | 12.000 |
Asset 3 | 8.000 |
Asset 4 | 15.000 |
Asset 5 | 20.000 |
Asset 6 | 25.000 |
1997 Total | 90.000 | 9.000
Asset 7 | 8.000 |
Asset 8 | 5.000 |
1998 Total | 103.000 | 10.300

Salvage: 10 percent of cost

Asset life: 10 years (120 life periods)

This table shows depreciation using method 40:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -9.270 | 9.270 | 90.000 * 20.6 percent * (6 / 12) Periods
1998 | December 31, 1998 | -19.308 | 19.308 | (103.000 - 9.270) * 20.6 percent
1999 | December 31, 1999 | -15.331 | 15.331 | (103.000 - 28.578) * 20.6 percent
2000 | December 31, 2000 | -12.173 | 12.173 | (103.000 - 43.909) * 20.6 percent
2001 | December 31, 2001 | -9.665 | 9.665 | (103.000 - 56.082) * 20.6 percent
2002 | December 31, 2002 | -7.674 | 7.674 | (103.000 - 65.747) * 20.6 percent
2003 | December 31, 2003 | -6.903 | 6.903 | (103.000 - 73.421) * 20.6 percent
2004 | December 31, 2004 | -4.838 | 4.838 | (103.000 - 79.514) * 20.6 percent
2005 | December 31, 2005 | -3.841 | 3.841 | (103.000 - 84.352) * 20.6 percent
2006 | December 31, 2006 | -3.050 | 3.050 | (103.000 - 88.193) * 20.6 percent
2007 | December 31, 2007 | -1.457 | 1.457 | 103.000 - 91.243 - 10.300

Note. This rule uses a parent asset to depreciate a composite total. The asset must be booked into the same cost account to use the balance in the depreciation calculation. The DSA5 AAI must be set up for using element 61 to retrieve the general ledger balance.

You can set up the composite depreciation amount with the application report writer to combine totals and create journal entries for the desired calculation.

This table explains the requirements for method 40:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 40 for an asset life of 240 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 midyear, start of period, or half-year.
Conventions | Disposal conventions are set for the modified start dates of midyear and half-year. Set the convention to allow depreciation beyond the asset life and to exceed remaining basis.
Life year rules | Primary life years 1 to 1 use a fixed rate percent of 20.6 percent, including initial year apportionment. Primary life years 2 to 998 use a fixed rate percent of 20.6 percent, including accumulated depreciation.
Calculations | Basis times the percent rate of 20.6 percent. Basis (the cost from the general ledger balance) includes the salvage value.
Disposals | Method 40 has no disposal rules.

### Korea Straight Line (Method 41)

For the example that follows, these assumptions apply:

- Actual Start Date: July 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 500.000 WON (without tax).

- Salvage: 1 WON.

- Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 41:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -125.000 | 125.000 | 500.000 * 48 / 12
1998 | December 31, 1998 | -125.000 | 125.000 | 500.000 * 48 / 12
1999 | December 31, 1999 | -125.000 | 125.000 | 500.000 * 48 / 12
2000 | December 31, 2000 | -124.00 | 124.000 | 500.000 - 375.000 - 1
2001 | December 31, 2001 |  |  |

Example prior to January 1, 1995:

- Actual Start Date: July 15, 1994.

- Modified Start Date: January 1, 1994.

- Cost: 500.000 WON (without tax).

- Salvage: 10 percent cost for 48 periods, 8 percent, 6 percent, 4 percent, 2 percent of cost and 1000.

- Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 41 prior to 1995:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1994 | December 31, 1994 | -112.500 | 112.500 | (500.000 - 50.000) * 48 / 12
1995 | December 31, 1995 | -112.500 | 112.500 | (500.000 - 50.000) * 48 / 12
1996 | December 31, 1996 | -112.500 | 112.500 | (500.000 - 50.000) * 48 / 12
1997 | December 31, 1997 | -112.500 | 112.500 | (500.000 - 50.000) * 48 / 12
1998 | December 31, 1998 | -10.000 | -10.000 | (500.000 - 450.000 - 40.000)
1999 | December 31, 1999 | -10.000 | -10.000 | (500.000 - 460.000 - 30.000)
2000 | December 31, 2000 | -10.000 | -10.000 | (500.000 - 470.000 - 20.000)
2001 | December 31, 2001 | -10.000 | -10.000 | (500.000 - 480.000 - 10.000)
2002 | December 31, 2002 | -9.00 | -9.000 | (500.000 - 490.000 - 1.000)
2003 | December 31, 2003 |  |  |

Note. The asset was revalued in the 4th year of the asset's life. The revaluation amount includes the remaining calculations to finish depreciation.

This table explains the requirements for method 41:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 41 for asset lives of 48 and 60 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 whole year, first half/second half, or midyear.
Conventions | Disposal conventions are set for first half/second half.
Life year rules | Life years 1 to 1 straight line with initial year apportionment. Life years 2 to 4 straight line. Life year 5 depreciates to 8 percent salvage. Life year 6 depreciates to 6 percent salvage. Life year 7 depreciates to 4 percent salvage. Life year 8 depreciates to 2 percent salvage. Life year 9 depreciates to 1.000.
Calculations | Straight line is the asset life divided by normal number of periods. Basis includes salvage value for the remaining compute direction.
Disposals | Method 41 has no disposal rules.

### Korea Revaluation SL (Method 42)

For the example that follows, these assumptions apply:

- Actual Start Date: July 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 500.000 WON (without tax); additional revaluation 300.000 in 2000.

- Salvage: 1,000 WON.

- Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 42:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -125.000 | 125.000 | 500.000 * 25 percent
1998 | December 31, 1998 | -125.000 | 125.000 | 500.000 * 25 percent
1999 | December 31, 1999 | -125.000 | 125.000 | 500.000 * 25 percent
2000 | December 31, 2000 | -212.500 | 212.500 | (800.000 - 375.000) * 25 percent
2001 | December 31, 2001 | -211.500 | 211.500 | (800.000 - 587.500 - 1000

Note. The asset was revalued in the 4th year of the asset's life. The revaluation amount is included in the remaining calculations to finish depreciation.

This table explains the requirements for method 42:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 42 for asset lives of 48 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 whole year.
Conventions | Allow depreciation beyond the asset's life, but do not exceed remaining basis.
Life year rules | Life years 1 to 3 take 25 percent. Life years 4 to 4 take 50 percent remaining basis, not including salvage. Life year 5 depreciates remaining basis, including salvage.
Calculations | Cost at the rate of 25 percent. Half of remaining basis, not including salvage. Basis includes salvage value.
Disposals | Method 42 has no disposal rules.

### Korea Capital Expenditure SL (Method 43)

For the example that follows, these assumptions apply:

- Actual Start Date: July 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 500.000 WON (without tax); additional revaluation 300.000 in 2000.

- Salvage: 1,000 WON.

- Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 43:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -125.000 | 125.000 | 500.000 * 25 percent
1998 | December 31, 1998 | -125.000 | 125.000 | 500.000 * 25 percent
1999 | December 31, 1999 | -125.000 | 125.000 | 500.000 * 25 percent
2000 | December 31, 2000 | -200.000 | 200.000 | 800.000 * 25 percent
2001 | December 31, 2001 | -200.000 | 200.000 | 800.000 * 25 percent
2002 | December 31, 2002 | -24.000 | 24.000 | 800.000 - 775.000 - 1.000

Note. The asset was revalued in the 4th year of the asset's life. The revaluation amount is included in the remaining calculations to finish depreciation.

This table explains the requirements for method 43:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 43 for asset lives of 48 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 whole year.
Conventions | Allow depreciation beyond the asset's life, but do not exceed remaining basis.
Life year rules | Life years 1 to 3 take 25 percent. Life years 4 to 4 take 50 percent remaining basis, not including salvage. Life year 5 depreciates remaining basis, including salvage.
Calculations | Cost at the rate of 25 percent. Half of remaining basis, not including salvage. Basis includes salvage value.
Disposals | Method 43 has no disposal rules.

### Korea Special Rate SL (Method 44)

For the example that follows, these assumptions apply:

- Actual Start Date: July 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 500.000 WON (without tax).

- Salvage: 1,000 WON.

- Asset Life: 4 years (48 life periods).

These tables show the depreciation of an asset when using depreciation method 44:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -125.000 | 125.000
1998 | December 31, 1998 | -125.000 | 125.000
1999 | December 31, 1999 | -124.000 | 124.000
2000 | December 31, 2000 |  |
2001 | December 31, 2001 |  |

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 | -62.500 | 62.500 | 500.000 * 25 percent | (500.000 * 25 percent) * 50 percent
1998 | -62.500 | 62.500 | 500.000 * 25 percent | (500.000 * 25 percent) * 50 percent
1999 |  |  | 500.000 - 250.000 - 125.000 - 1.000 |
2000 |  |  |  |
2001 |  |  |  |

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts. These calculations can be done by using only primary rules, including the secondary calculations within the primary rule formulas.

This table explains the requirements for method 44:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 44 for asset lives of 48 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 whole year.
Conventions | Allow depreciation beyond the asset's life, but do not exceed remaining basis. Set the convention to allow two accumulated depreciation accounts and two depreciation expense accounts.
Life year rules | Primary life years 1 to 2 take 25 percent of cost. Secondary life years 1 to 2 take 25 percent of cost at the rate of 50 percent. Primary life year 3 and onward depreciate remaining basis, including salvage.
Calculations | Primary 25 percent. Secondary 25 percent of cost at the rate of 50 percent. Basis includes salvage value.
Disposals | Method 44 has no disposal rules.

### Korea Declining Balance (Method 45)

For the example that follows, these assumptions apply:

- Actual Start Date: July 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 500.000 WON (without tax).

- Salvage: 1,000 WON.

- Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 45:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -264.000 | 264.000 | 500.000 * 52.8 percent
1998 | December 31, 1998 | -124.608 | 124.608 | (500.000 - 264.000) * 52.8 percent
1999 | December 31, 1999 | -58.815 | 58.815 | (500.000 - 388.608) * 52.8 percent
2000 | December 31, 2000 | -51.577 | 51.577 | (500.000 - 447.423) - 1.000
2001 | December 31, 2001 |  |  |

Note. Another rule is also set up for assets in service prior to January 1, 1995.

This table explains the requirements for method 45:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 45 for asset lives of 48 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 whole year.
Conventions | No conventions are needed.
Life year rules | Life years 1 to 3 at a fixed rate of 52.8 percent, including accumulated depreciation. Life year 4 is remaining basis, including salvage.
Calculations | Basis times the percent rate of 52.8 percent, including accumulated depreciation. Basis includes salvage value.
Disposals | Method 45 has no disposal rules.

### Korea Revaluation Declining (Method 46)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 500.000 WON (without tax); 300.000 was added in 2000.

- Salvage: 1,000.

- Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 46:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -264.000 | 264.000 | 500.000 * 52.8 percent
1998 | December 31, 1998 | -124.608 | 124.608 | (500.000 - 264.000) * 52.8 percent
1999 | December 31, 1999 | -58.815 | 58.815 | (500.000 - 388.608) * 52.8 percent
2000 | December 31, 2000 | -317.319 | 317.319 | (800.000 - 447.423) * 90 percent
2001 | December 31, 2001 | -34.258 | 34.258 | 800.000 - 764.742 - 1.000

Note. The asset was revalued with an additional 300.000 in the third year of the life.

This table explains the requirements for method 46:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 46 for asset lives of 48 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 whole year.
Conventions | Set the convention to continue depreciation beyond the asset's life, but not to exceed remaining basis.
Life year rules | Life years 1 to 3 at a fixed rate of 52.8 percent, including accumulated depreciation. Life year 4 takes 90 percent, including accumulated depreciation. Life years 5 to 998 take remaining basis, including salvage.
Calculations | Basis times the percent rate of 52.8 percent, including accumulated depreciation. Remaining basis includes salvage value.
Disposals | Method 46 has no disposal rules.

### Korea Capital Expenditure DB (Method 47)

For the example that follows, these assumptions apply:

- Actual Start Date: May 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 500.000 WON (without tax); 300.000 was added in 2000.

- Salvage: 1,000.

- Asset Life: 4 years (48 life periods).

This table shows the depreciation of an asset when using depreciation method 47:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense | Calculation
1997 | December 31, 1997 | -264.000 | 264.000 | 500.000 * 52.8 percent
1998 | December 31, 1998 | -124.608 | 124.608 | (500.000 - 264.000) * 52.8 percent
1999 | December 31, 1999 | -58.815 | 58.815 | (500.000 - 388.608) * 52.8 percent
2000 | December 31, 2000 | -186.161 | 186.161 | (800.000 - 447.423) * 52.8 percent
2001 | December 31, 2001 | -87.868 | 87.868 | (800.000 - 633.584) * 52.8 percent
2002 | December 31, 2002 | -77.549 | 77.549 | 800.000 - 721.451 - 1.000

Note. The asset was revalued with an additional 300.000 in the third year of the life.

This table explains the requirements for method 47:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 47 for asset lives of 48 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 whole year.
Conventions | Set the convention to continue depreciation beyond the asset's life, but not to exceed remaining basis.
Life year rules | Life years 1 to 5 at a fixed rate of 52.8 percent, including accumulated depreciation. Life years 6 to 998 take remaining basis, including salvage.
Calculations | Basis times the percent rate of 52.8 percent, including accumulated depreciation. Remaining basis includes salvage value.
Disposals | Method 47 has no disposal rules.

### Korea Special Rate SL (Method 48)

For the example that follows, these assumptions apply:

- Actual Start Date: July 15, 1997.

- Modified Start Date: January 1, 1997.

- Cost: 500.000 WON (without tax).

- Salvage: 1,000 WON.

- Asset Life: 4 years (48 life periods).

These tables show the depreciation of an asset when using depreciation method 48:

Year | End of Year Date | Accumulated Depreciation | Depreciation Expense
1997 | December 31, 1997 | -264.000 | 264.000
1998 | December 31, 1998 | -54.912 | 54.912
1999 | December 31, 1999 | -11.422 | 11.422
2000 | December 31, 2000 | -3.499 | 3.499
2001 | December 31, 2001 |  |

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 | -132.000 | 132.000 | 500.000 * 52.8 percent | (500.000 * 52.8 percent) * 50 percent
1998 | -27.546 | 27.546 | (500.000 - 396.000) * 52.8 percent | (500.000 - 396.000) * 52.8 percent * 50 percent
1999 | -5.711 | 5.711 | (500.000 - 478.368) * 52.8 percent | (500.000 - 478.368) * 52.8 percent * 50 percent
2000 |  |  | 500.000 - 495.501 - 1.000 |
2001 |  |  |  |

Note. The SDA and SDE1 AAIs need to be set up for the secondary accounts. The AAIs can be set up with the same account as the primary accounts. These calculations can be done by using only primary rules, including the secondary calculations within the primary rule formulas.

This table explains the requirements for method 48:

Requirement | Explanation
Asset life | The demonstration data includes versions of method 48 for asset lives of 48 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 whole year.
Conventions | Allow depreciation beyond the asset's life, but do not exceed remaining basis. Set the convention to allow two accumulated depreciation accounts and two depreciation expense accounts.
Life year rules | Primary life years 1 to 3 take 52.8 percent of cost. Secondary life years 1 to 3 take 52.8 percent of cost at the rate of 50 percent. Primary life year 4 and onward depreciate remaining basis, including salvage.
Calculations | Primary 52.8 percent. Secondary 52.8 percent of cost at the rate of 50 percent. Remaining basis includes salvage value.
Disposals | Method 48 has no disposal rules.

### 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 |  |
2001 | December 31, 2001 |  |
2002 | December 31, 2002 |  |
2003 | December 31, 2003 |  |

This table shows the second depreciation:

Year | 2nd Accumulated Depreciation | 2nd Depreciation Expense | 3rd Depreciation Expense | Rule 1 Calculation | Rule 2 Calculation
1997 |  |  |  | 500.000 * .5 * .62739726 (First percent) |
1998 |  |  |  | 500.000 * .5 |
1999 | -156.849 | 156.849 |  | 500.000 * .5 * .37260284 (First percent) | 500.000 * .5 * .62739726 (First percent)
2000 | -250.000 | 250.000 |  |  | 500.000 * .5
2001 | -93.151 | 93.151 |  |  | 500.000 * .5 * .37260284 (First percent)
2002 | 345.068 |  | -345.068 |  | (500.000 - 500.000 - 500.000 - 50.000) * .62739726 (First percent)
2003 | 204.932 |  | -204.932 |  | (500.000 - 500.000 154.932 + 50.000)

Note. 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.