Residual Value of 5% 
Residual Value of 5%
If a declining-balance depreciation method is used to depreciate an asset, 5% of the acquisition value of that asset must be considered as scrap value in order to calculate the annual depreciation percentage rate. The asset can be written off in the year in which the net book value of this asset hits the 5% residual value.
In the R/3 System, assets subject to the 5% residual value regulations are depreciated using a depreciation method with an assigned 5% cut-off value key.
If an asset reaches the 5% residual value the system changes over to a depreciation calculation key that is entered in the customizing of the depreciation key. The change over key is a calculation key that depreciates 100% of the net book value.
The assets that are subject to a change over to the depreciation of the 5% residual value are found by the ratio between net book value and acquisition costs.
If an asset is depreciated over 5 years, the percentage of the net book value is as follows
Year |
NBV/APC |
1 |
54,90 % |
2 |
30,14% |
3 |
16,55% |
4 |
9,08% |
5 |
5 % |
For a useful life of 5 years a depreciation key must be used, that changes over to a depreciation calculation key for 100% of the net book value in the moment a ratio between net book value and acquisition costs of 9,1 % is reached. If this percentage rate is reached, the system shifts to the change over key from the following year on.
In the pre-configuration of the Korean company code, several depreciation keys are prepared:
Key |
Usage |
KD02 |
declining balance, 5% residual value, 2 years useful life |
KD03 |
declining balance, 5% residual value, 3 years useful life |
KD04 |
declining balance, 5% residual value, 4 years useful life |
... |
... ... ... ..... |
KD15 |
declining balance, 5% residual value, 15 years useful life |
KD20 |
declining balance, 5% residual value, 20 years useful life |
KD25 |
declining balance, 5% residual value, 25 years useful life |
KD30 |
declining balance, 5% residual value, 30 years useful life |
Create new depreciation keys for your assets copying the calculation keys and the depreciation key listed above. Enter the number of years of the useful life as the 3rd and 4 th digit of the keys. Change the percentage rate for the change over according to the following table.
Useful life in years |
Percentage rate to be entered as remaining value rate |
Useful life in years |
Percentage rate to be entered as remaining value rate |
2 |
22.4 % |
31 |
5.5 % |
3 |
13.5 % |
32 |
5.6 % |
4 |
10.6 % |
33 |
5.4 % |
5 |
9.1 % |
34 |
5.5 % |
6 |
8.2 % |
35 |
5.5 % |
7 |
7.7 % |
36 |
5.4 % |
8 |
7.3 % |
37 |
5.4 % |
9 |
7.0 % |
38 |
5.4 % |
10 |
6.7 % |
39 |
5.4 % |
11 |
6.6 % |
40 |
5.4 % |
12 |
6.4 % |
41 |
5.5 % |
13 |
6.3 % |
42 |
5.3 % |
14 |
6.2 % |
43 |
5.4 % |
15 |
6.1 % |
44 |
5.3 % |
16 |
6.0 % |
45 |
5.5 % |
17 |
5.9 % |
46 |
5.3 % |
18 |
5.9 % |
47 |
5.3 % |
19 |
5.8 % |
48 |
5.2 % |
20 |
5.8 % |
49 |
5.4 % |
21 |
5.8 % |
50 |
5.4 % |
22 |
5.8 % |
51 |
5.3 % |
23 |
5.7 % |
52 |
5.3 % |
24 |
5.7 % |
53 |
5.3 % |
25 |
5.6 % |
54 |
5.3 % |
26 |
5.6 % |
55 |
5.3 % |
27 |
5.6 % |
56 |
5.3 % |
28 |
5.6 % |
57 |
5.3 % |
39 |
5.6 % |
58 |
5.4 % |
30 |
5.5 % |
59 |
5.1 % |
|
60 |
5.2 % |
A depreciation key for a useful life of 40 years, should be configured in a way, that the percentage rate for the change over is 5.4, because the NBV/APC ratio in the year before the change over is 5.425. The year before that year the ratio is 5.846. The net book value of the asset would become smaller then this comparison value just one year before the net book value must be depreciated completely. The system would then change over to the new deprecation calculation key. In the following year the net book value of the asset would depreciated according to the new depreciation calculation key, that means the net book value would be depreciated completely.