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### Accelerated Method: Czech Republic and Slovakia

Note

The accelerated depreciation method is available in the Czech Republic and Slovakia localizations only.

End of the note.

Accelerated depreciation is a method of accelerating the assignment of an asset's cost to depreciation by allocating a larger amount to the early years of the asset's useful life.

In the Czech Republic and Slovakia, the depreciation of the fixed tangible assets is categorized as follows:

Depreciation Category

Period of Depreciation

1

4 years

2

6 years

3

12 years

4

20 years

For each depreciation category, different coefficients are assigned to the assets for depreciation calculation as follows:

Coefficient for Accelerated Depreciation

Depreciation Category

Coefficient in the 1st Year of Depreciation (Ko)

Coefficient in Subsequent Years of Depreciation (Kr)

Coefficient for Modernization Year and Following Years (Kz)

1

4

5

4

2

6

7

6

3

12

13

12

4

20

21

20

Usually, in the course of an asset's useful life, the asset's value can be increased and useful life extended as a result of reconstruction or renovation, such as the extensions and adaptations of buildings. When such modernization activity takes place, the asset's remaining life is extended to its original useful life as if the asset were new. Therefore, the depreciation charges are recalculated according to a new coefficient.

In general, the following rules apply:

• Ko = Useful Life

• Kr = Useful Life + 1

• Kz = Useful Life

In SAP Business One, you can trigger the modernization of an asset by doing the following:

• Creating a subsequent acquisition for the asset

• Increasing the asset's useful life in the modernization year

Note

To trigger the modernization, you must increase the asset's useful life by a certain period, calculated as follows:

Increased Useful Life (Months) = Original Useful Life (Months) – Remaining Useful Life (Months) – 12

End of the note.

Example

Asset X has a useful life of four years. On January 1st, 2010, it is capitalized and the depreciation starts. On January 1st, 2012, there is a modernization of the asset. At this point, the asset's remaining life is two years.

In SAP Business One, to trigger the modernization, you must first create a subsequent acquisition for the asset. Then, you must increase the asset's useful life by 12 months, as calculated in the below formula:

Increased Useful Life (Months) = 12 * 4 – [12 * (4 – 2)] –12 = 12

End of the example.

With the accelerated method, SAP Business One calculates the yearly depreciation charges for an asset as follows:

• Without Modernization

Depreciation in First Year = Acquisition and Production Costs / Ko

Depreciation in Subsequent Years = 2 * Net Book Value / (Kr – n)

Note

n = Number of years of depreciation

End of the note.
• With Modernization

Depreciation in First Year = Acquisition and Production Costs / Ko

Depreciation in Subsequent Years Before Modernization = 2 * Net Book Value / (Kr – n)

Depreciation in Modernization Year = 2 * Net Book Value / Kz

Depreciation in Subsequent Years = 2 * Net Book Value / (Kz – N)

Note

n = Number of years of depreciation

N = Number of years of depreciation after modernization

End of the note.

Example

Without Modernization

Asset X

Acquisition and Production Costs: 48,000 EUR

Useful Life: 4 Years

Depreciation Method: Accelerated

Calculation Base: Yearly

Capitalization Date: January 1st, 2010

The system calculates the yearly depreciation as follows:

• 2010

48000 EUR / 4 = 12000 EUR

• 2011

2 * (48000 EUR – 12000 EUR) / (5 – 1) = 18000 EUR

• 2012

2 * (48000 EUR – 12000 EUR – 18000 EUR) / (5 – 2) = 12000 EUR

• 2013

2 * (48000 EUR – 12000 EUR * 2 – 18000 EUR) / (5 – 3) = 6000 EUR

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

2010

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

2011

1500

1500

1500

1500

1500

1500

1500

1500

1500

1500

1500

1500

2012

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

2013

500

500

500

500

500

500

500

500

500

500

500

500

End of the example.

Example

With Modernization

Asset Y

Acquisition and Production Costs: 48,000 EUR

Useful Life: 4 Years

Depreciation Method: Accelerated

Calculation Base: Yearly

Capitalization Date: January 1st, 2010

Modernization: 12,000 EUR on January 1st, 2012

To trigger the modernization, you change the asset's useful life from 48 months to 60 months for fiscal year 2012.

The system calculates the yearly depreciation as follows:

• 2010

48000 EUR / 4 = 12000 EUR

• 2011

2 * (48000 EUR – 12000 EUR) / (5 – 1) = 18000 EUR

• 2012

2 * (48000 EUR – 12000 EUR – 18000 EUR + 12000 EUR) / 4 = 15000 EUR

• 2013

2 * (48000 EUR – 12000 EUR – 18000 EUR + 12000 EUR – 15000 EUR) / (4 – 1) = 10000 EUR

• 2014

2 * (48000 EUR – 12000 EUR – 18000 EUR + 12000 EUR – 15000 EUR – 10000 EUR) / (4 – 2) = 5000 EUR

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

2010

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

2011

1500

1500

1500

1500

1500

1500

1500

1500

1500

1500

1500

1500

2012

1250

1250

1250

1250

1250

1250

1250

1250

1250

1250

1250

1250

2013

833.33

833.33

833.33

833.33

833.33

833.33

833.33

833.33

833.33

833.33

833.33

833.33

2014

416.67

416.67

416.67

416.67

416.67

416.67

416.67

416.67

416.67

416.67

416.67

416.67

End of the example.