Example - Straight-Line Depreciation Using Half-Year Convention

A fixed asset has an acquisition cost of LCY 100,000. The Depreciation Starting Date is 03/01/00. The estimated life is five years, so the Depreciation Ending Date must be 06/30/05. The Calculate Depreciation batch job is run annually. This example is based on a calendar fiscal year.

The FA ledger entries look like this:

Date FA Posting Type Days Amount Book Value

03/01/00

Acquisition Cost

*

100,000.00

100,000.00

12/31/00

Depreciation

270

-10,000.00

90,000.00

12/31/01

Depreciation

360

-20,000.00

70,000.00

12/31/02

Depreciation

360

-20,000.00

50,000.00

12/31/03

Depreciation

360

-20,000.00

30,000.00

12/31/04

Depreciation

360

-20,000.00

10,000.00

12/31/05

Depreciation

180

-10,000.00

0.00

* Depreciation start date

Example - DB1/SL Depreciation Using Half-Year Convention

A fixed asset has an acquisition cost of LCY 100,000. The Depreciation Starting Date is 11/01/00. The estimated life is five years, so the Depreciation Ending Date must be 06/30/05. In the FA Depreciation Books window, the Declining-Balance % field contains 40. The Calculate Depreciation batch job is run annually. This example is based on a calendar fiscal year.

The FA ledger entries look like this:

Date FA Posting Type Days Amount Book Value

11/01/00

Acquisition Cost

*

100,000.00

100,000.00

12/31/00

Depreciation

60

-20,000.00

80,000.00

12/31/01

Depreciation

360

-32,000.00

48,000.00

12/31/02

Depreciation

360

-19,200.00

28,800.00

12/31/03

Depreciation

360

-11,520.00

17,280.00

12/31/04

Depreciation

360

-11,520.00

5,760.00 SL

12/31/05

Depreciation

180

-5,760.00

0.00 SL

* Depreciation start date

"SL" after the book value means that the straight-line method has been used.

Calculation method:

1st year:

Declining-balance amount:

Full year amount = 40% of 100,000 = 40,000. Thus, for half a year 40,000 / 2 = 20,000

Straight-line amount:

Full year amount = 100,000 / 5=20,000. Thus, for half a year = 20,000 / 2 =10,000

The declining-balance amount is used because it is the greater amount.

5th year (2004):

Declining-balance amount: 40% of 17,280.00 = 6,912.00

Straight-line amount = 28,800/1.5 = 11,520.00

The straight-line amount is used because it is the greater amount.

See Also

Other Resources

Calculate Depreciation