Management Depreciation - Linear with Depreciation Maximum Value

This is a variation of linear depreciation method or constant quotes, and it consists in establishing asset depreciation value.

Maximum depreciation value aims at presenting the asset will have a residual value at the end of the its useful life.

It is compulsory filling out the field Vl. Max. Depre. (N3_VMXDEPR), which establishes depreciation value.

 

Calculation features:

The rate is fixed and established as a consequence of asset useful life.

 

Formulas to establish the rate:

Annual depreciation rate = 100% / Asset useful life

Monthly depreciation rate = (100% / Asset useful life) /12

 

Formula to establish depreciation value:

Annual depreciation = Maximum depreciation value * Annual depreciation rate

Monthly depreciation = Maximum depreciation value * Monthly depreciation rate

Where:

Maximum depreciation value: value established by the government for tax purposes or specified by accounting professional or equity due to asset return expectation after its useful life.

 

Example of monthly depreciation calculation:

Asset Value                        30,000.00

Limit Value                        25,000.00

Useful life (years)                05 year

Annual rate                        20%

Monthly Rate                        1.67%        

 

 

Month

Monthly Rate

Calculation Basis

Monthly Depreciation

Accumulated Depreciation

01

1.67%

25,000.00

417.50

417.50

02

1.67%

25,000.00

417.50

835.00

...

1.67%

25,000.00

417.50

...

60

1.67%

25,000.00

417.00

25,000.00

 

 

Comments on calculation:

When depreciation maximum value is established, depreciation calculation is performed based on it, as if calculation is still based on original updated value, depreciation is accelerated, diverging from depreciation status, as maximum value is reached before the end of asset useful life:

 

Month

Monthly Rate

Calculation Basis

Monthly Depreciation

Accumulated Depreciation

01

1.67%

30,000.00

500.00

500.00

02

1.67%

30,000.00

500.00

1,000.00

...

1.67%

30,000.00

500.00

...

50

1.67%

30,000.00

500.00

25,000.00

 

 

0414921d-18d8-4cf3-b1fa-c42a9921c533Note:

In the previous example, the asset reached depreciation maximum value in 50 months, which means, before the end of useful life, estimated in 60 months (05 years).

 

Linear with depreciation maximum value: Calculation with more than one currency

Fixed Asset module allows controlling the asset in multiple currencies, which means for each currency a depreciation calculation is performed, independent from the others as each currency presents its own original value and own depreciation rate.

In addition to calculation per currency feature, it is possible to establish that the currency base for depreciation limit is different from hard currency, by configuring the following parameters:

confluencepage-4b470720-a8c6-4dd5-8338-0181d75bd8fd establishes Fixed Asset hard currency to be used as base for controlling monetary conversion and remaining controls.

confluencepage-0deb3f72-fcbd-4327-b74d-2014ff92e67f: establishes reference currency for depreciation limit value.

As a consequence of these reasons, it is necessary to proportion the calculation base of the other currencies entered in asset file, based on calculation established for the currency used for controlling depreciation maximum value.

This proportion is performed through cross-multiplication:

Maximum Value in Currency N = Base Value in Currency N * (Maximum Value in Maximum Currency / Maximum Currency Base Value).

 

Example of calculation with linear depreciation with maximum value and base in other currency:

Base Value for Currency 02                US$ 15,000.00

Maximum Value in Currency 02                US$ 10,000.00

Proportion for the other currencies        10,000.00 / 15,000.00 = 66.67%

Base Value for Currency 01                30,000.00 * 66.67% = 20,000.00

 

Calculation in currency 02:

Month

Monthly Rate

Calculation Base (US$)

Monthly Depreciation (US$)

Accumulated Depreciation (US$)

01

1.67%

10,000.00

166.67

166.67

02

1.67%

10,000.00

166.67

333.34

...

1.67%

10,000.00

166.67

...

60

1.67%

10,000.00

166.47

10,000.00

Calculation in currency 01:

Month

Monthly Rate

Calculation Base (R$)

Monthly Depreciation (R$)

Accumulated Depreciation (R$)

01

1.67%

20,000.00

333.34

333.34

02

1.67%

20,000.00

333.34

666.68

...

1.67%

20,000.00

333.34

...

60

1.67%

20,000.00

332.94

20,000.00