Depreciation for Multiple-Shift Operation and Shutdown
Use
Increased depreciation is often calculated for assets that are used in multiple shifts. Often no depreciation is calculated for assets that are shut down. The following fields are provided for these instances in the asset master record:
Features
Multiple-Shift Operation
You can calculate increased depreciation due to multiple-shift operation for all types of depreciation except unit-of-production (unit-of-production depreciation is by definition 100% variable). You take this increased wear and tear on the asset into account using the following method:
The total depreciation amount is then calculated as follows:
Depreciation amount = fixed depreciation + (variable depreciation * shift factor)
The following example shows the depreciation amounts for an asset with 1000 annual depreciation, and 60% variable portion:
shift factor 0: 400 + (0 * 60 * 1000/100) = 400 (only fixed portion)
shift factor 1: 400 + (1 * 60 * 1000/100) = 1000
shift factor 2: 400 + (2 * 60 * 1000/100) = 1600
shift factor 3: 400 + (3 * 60 * 1000/100) = 2200
Expired Useful Life
In the definition of the depreciation key, you can specify for multiple shift use whether
Using these options, you can ensure, for example, that depreciation is increased during the declining-balance phase, but that the straight-line phase after the changeover continues until the end of the planned useful life.
Multiple-Shift Operation for Assets with Declining-Balance Depreciation
For assets using declining-balance depreciation, the system increases depreciation amounts during the declining-balance phase of depreciation, based on the multiple shift factor and the variable portion of depreciation. However, depreciation is only increased up to the maximum percentage rate that is specified in the depreciation key.
Shutdown
If an asset is shut down for a given period of time, you can suspend the depreciation as follows:
The system does not calculate depreciation during the time period of the shutdown. The useful life of the asset increases by this length of time. When you remove the shutdown indicator, the system automatically resumes the calculation of depreciation.
Shutdown does not influence the calculation of interest to exact periods. The system stops calculating interest during shutdown only if these conditions are met: