Depreciation methods
- Straight Line
- Reducing Balance
- Straight Line
- Usage
- Sum of Digits (rule of 78)
- MACRS
- ACRS
- Reducing Balance switching to Straight Line
- Double Declining Balance switching to Straight Line
Straight Line and Reducing Balance are the most common depreciation methods in use. The co-existence of corporate and taxation depreciation calculations is required.
Different base values are used for depreciation, such as acquisition value, 50% of acquisition value, replacement value, and 50% of replacement value.
France specifics
These methods are typically used in France:
- Reducing Balance depreciation switching to Straight Line: Ordinary depreciation is
straight line and covers a period of 4-80 years, depending on the type of assets. Assets
below a certain capital value can be fully depreciated to 100% in the year of
acquisition.
Typically, straight line depreciation is used and expenditure is divided by the estimated number of years of an asset's useful life.
The declining balance method is available for certain types of business property, for example, water and air purification systems, security and safety equipment, machinery, and industrial maintenance equipment.
- French Straight Line: This method is similar to the regular straight line method but considers the date at which an asset was used for the first time. It is mandatory to prorate depreciation to the day during the first depreciation year. The remaining days of the first period are depreciated by an additional last period. For example, if the asset is bought on day 2 of a month, the lifetime is increased for one period with one day depreciation.
- French Declining Balance: Transfer to linear is done when the declining annual depreciation amount is less than the declining depreciation remaining value divided by the remaining fiscal years.
- French Derogatory: This method is used to calculate the difference between the French
Declining Balance method and the French Straight Line method
Companies can change the depreciation method from Declining to Linear with derogatory depreciation. During this process, the lifetime of linear method can be changed. This also has an impact on existing derogatory depreciation.
The difference between Fiscal Linear depreciation and previous economic depreciation must be accounted for in a separate depreciation account.
The purpose of this method is to depreciate an asset using a standard fiscal method such as Linear. An economic depreciation method, such as declining, is used in parallel. The difference of those methods is called Derogatory. It permits the increase in depreciation at the beginning of the lifetime, and then reverses it in order to reach zero adjustment.
How Infor meets this requirement
SyteLine provides these standard depreciation methods, shown with abbreviations used in the application:
- sl = straight line
- SYD = sum-of-the-years'-digits
- usage = production or use method
- 125DB = 125% declining balance
- 150DB = 150% declining balance
- 175DB = 175% declining balance
- 200DB = double declining balance
You can also create unlimited user-defined depreciation methods, such as Sum of Digits, MACRS, or ACRS in the Fixed Asset Depreciation Tables form.
However, the French Derogatory method is not currently supported.
The coexistence of corporate and taxation depreciation calculations is supported. The application supports 4 depreciation schedules but only one BOOK goes to Ledger. The others are only for reporting purposes If the acquisition cost or bonus amount is changed for an asset after some depreciation expense has been posted (accumulated depreciation > 0), then we recommend that you delete and re-enter the asset with the changed cost, bonus amount, and accumulated depreciation. Otherwise, the future calculated depreciation deduction amounts will be incorrect. This only pertains to assets using the declining balance method with periodic frequency.
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