Example: Period-Based Changeover of Depreciation Method 

 

Starting Values:

Acquisition value:           12000

Useful life:               2 years (24 periods)

Periodic depreciation:     Net book value (at start of period) x 2/24

 

●     Depreciation is calculated for period 3:
(12000 – 1000) x 2/24 = 11000 x 2/24 = 916.67

●     You also specified that the depreciation method should change over when the net book value goes below 20% of the APC: 12000 x 0.2= 2400

●     In period 9 (second fiscal year), the net book value at the start of the period is 2297.19.  Since the net book value is now below 2400, the system automatically changes the depreciation method from declining-balance to straight-line in period 9.

●     For the remaining five periods, the depreciation amount is then 459.44:   2297.19 / 5 = 459.44.