Multilevel Method

With the multilevel method, you can view an asset's useful life as several phases and depreciate the asset by a defined rate for each phase. This way, the asset can have a course of depreciation that changes in levels over time. SAP Business One lets you break down an asset's useful life into multiple phases, for each of which you can specify a depreciation rate and a validity period.

Multilevel Method

Level
Displays the level of depreciation. SAP Business One lets you specify multiple levels, with each level representing a phase in an asset's useful life.

Base
Select one of the following as the base for the depreciation calculation in each phase: Acquisition Value The annual depreciation in each phase is calculated using the following formula: (Acquisition Value – Salvage Value) * Annual Percentage Net Book Value The annual depreciation in each phase is calculated using the following formula: (Net Book Value – Salvage Value) * Annual Percentage

Number of Years
Enter the number of years in each phase. You can enter integers only.

Annual Percentage
Enter the annual percentage rate for the depreciation calculation that is valid for each phase.

Example Example

Asset X

Acquisition and Production Costs: 60,000 USD

Useful Life: 60 Months

Depreciation Method: Multilevel

Calculation Base: Yearly

Capitalization Date: January 1st, 2010

Calculation
Level	Base	Number of Years	Annual Percentage
1	Acquisition Value	2	35
2	Acquisition Value	3	10

The system calculates the depreciation as follows:

2010 – 2011
Each year, the depreciation is calculated as follows:

60000 USD * 35% = 21000 USD

Therefore, the monthly deprecation is 1,750 USD.
2012 – 2014
Each year, the depreciation is calculated as follows:

60000 USD * 10% = 6000 USD

Therefore, the monthly depreciation is 500 USD.

	Jan.	Feb.	Mar.	Apr.	May	Jun.	Jul.	Aug.	Sep.	Oct.	Nov.	Dec.
2010	1750	1750	1750	1750	1750	1750	1750	1750	1750	1750	1750	1750
2011	1750	1750	1750	1750	1750	1750	1750	1750	1750	1750	1750	1750
2012	500	500	500	500	500	500	500	500	500	500	500	500
2013	500	500	500	500	500	500	500	500	500	500	500	500
2014	500	500	500	500	500	500	500	500	500	500	500	500

End of the example.

Example Example

Asset Y

Acquisition and Production Costs: 60,000 USD

Useful Life: 60 Months

Depreciation Method: Multilevel

Calculation Base: Monthly

Capitalization Date: January 1st, 2010

Calculation
Level	Base	Number of Years	Annual Percentage
1	Net Book Value	2	35
2	Net Book Value	3	10

The system calculates the depreciation as follows:

2010: January
60000 USD * 35% / 12 = 1750 USD
2010: February
(60000 USD – 1750 USD) * 35% / 12 = 1698.95 USD

The amount is then rounded to 1699 USD.

Note
In the above formula, the system recalculates the annual depreciation based on the new book value in February, thereby dividing the amount by 12 instead of 11 to get the depreciation amount of this month.

End of the note.
2011: March
(60000 USD – 1750 USD – 1699 USD) * 35% / 12 = 1649.40

The amount is then rounded to 1649 USD.
...
2014: December
At the beginning of December 2014, the asset's accumulated depreciation has reached 38,003 USD, and its net book value is still 21,997 USD. Therefore, to fully depreciate the asset at the end of its useful life, the depreciation amount in December is 21,997 USD.

	Jan.	Feb.	Mar.	Apr.	May	Jun.	Jul.	Aug.	Sep.	Oct.	Nov.	Dec.
2010	1750	1699	1649	1601	1555	1509	1465	1423	1381	1341	1302	1264
2011	1227	1191	1156	1123	1090	1058	1027	997	968	940	912	886
2012	246	244	242	240	238	236	234	232	230	228	226	224
2013	222	220	219	217	215	213	211	210	208	206	204	203
2014	201	199	198	196	194	193	191	190	188	186	185	21997

End of the example.

More Information

Depreciation Types - Setup Window: Calculation Tab