User manual - Chapter 2 Financial Calculation (TVM)

20010101
2-9 Depreciation
Any of the following four methods can be used to calculated depreciation.
uu
uu
uStraight-Line Method
The straight-line method calculates depreciation for a given period.
{Y–1}(PV–FV )
SL
1 =
n 12
u
(PV–FV )
SL
j =
n
12–{Y–1}
({Y–1}G12)
(PV–FV )
n 12
u
SL n+1 =
Depreciation for an item acquired part way through a year can be calculated by month.
uu
uu
uFixed Percentage Method
Fixed percentage method can be used to calculate depreciation for a given period, or to
calculate the depreciation rate.
100
I%
FP
j = (RDV j–1 + FV ) ×
100
{Y–1}I%
FP
1 = PV ×
12
×
FP
n+1 = RDV n ({Y–1}G12)
RDV
1 = PV – FV – FP 1
RDV j = RDV j–1 – FP j
RDV n+1 = 0 ({Y–1}G12)
Depreciation for an item acquired part way through a year can be calculated by month.
SL j : depreciation charge for the jth
year
n : useful life in years
PV :original cost (basis)
FV : scrap value (salvage value)
j :year
Y–1:number of depreciable months
in first year
FPj : depreciation charge for the jth year
RDVj :remaining depreciable value at the
end of jth year
I % : depreciation rate
2-9-1
Depreciation