Net Book Value (NBV)-oriented depreciation

The net book-value (NBV) oriented depreciation method is a variant of the declining balance depreciation method. In this method, the declining balance percentage is set for a period of a year. The computation is as follows:

depreciation amount = net book value * (declining percentage/100)

where:

NBV = Net Book Value

AD = Accumulated Depreciation

US tax books

NBV = (cost - salvage - sec179) * (business percentage/100) - AD

Other books

NBV = cost - salvage - AD
periodic depreciation = NBV * (declined balance percentage/100) * (periods depreciated/periods in fiscal year)
daily depreciation = NBV * (declined balance percentage/100) * (days depreciated/days in fiscal year)

For MACRS and ACRS, the salvage value is not applied to the depreciation of US tax and commercial books.

Straight-line calculation

If you use a depreciation method and the Switch to SL check box is selected in the Depreciation Methods (tffam7510m000) details session, LN applies either of these calculations:

  • Normal Straight Line 

    daily depreciation = NBV * (days depreciated/days in fiscal year)
    periodic depreciation = NBV * (periods depreciated/periods in fiscal year)

  • Straight-Line calculation with Remaining Life / Remaining Value 

    daily depreciation = NBV * (days depreciated/remaining life days)
    periodic depreciation = NBV * (periods depreciated/remaining life periods)

    If an asset book in the last period of the asset life has a net book value greater than zero (0), this value is depreciated fully in the last period.

LN applies these calculations according to the SL Switch Criteria defined in the FAM Parameters (tffam0500m000) session. The switch occurs in the first period in which the straight-line calculation results in a larger depreciation amount than the NBV-oriented depreciation.