How Depreciation Is Calculated With Monthly Depreciation Calendar,

How Depreciation Is Calculated With Monthly Depreciation Calendar, Daily Prorate And Even Depreciation Distribution [ID 343601.1]
		Modified 14-APR-2010     Type HOWTO     Status PUBLISHED

In this Document
  Goal
  Solution

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Applies to:

Oracle Assets

Goal

The depreciation calculation of this particular setup is explained with this example:

The setup of the depreciation book is as follows:

- Monthly depreciation calendar
- Daily prorate calendar
- Depreciation distribution: Even

The asset is created as follows:

- Date placed in service (DPIS): 15-JAN-2002
- Prorate convention: Daily, Prorate Date: 15-JAN-2002
- Cost: 60000, Depreciation method/life: STL 5 years
- Current open FA period: Jan-02

Solution

First we must calculate, based on remaining days in the first year, the charge for this year:

From 15th January to 31 December there are 351 days. Thus the charge for 2002 will be 60000 divided by 5 years (12000 per year). 2002 has 351 days left so the calculation is:

12000/365*351 = 11539.73

Then we can calculate the period depreciation:

The normal 'even' monthly charge would be 12000/12 months or 1000 each month from February through December (11000). This leaves for 2002 charge the calculated 11539.73 less 11 months at 1000. The charge for Jan 2002 = 539.73 (calculation: 11539.73 - 11000 = 539.73)

 

The asset gets retired on 15-APR-2002 with a Daily retirement convention:

Of the original 351 days, there remains after the retirement 261 days. Thus the balance of this year's charge that will not be charged will be 261 days i.e., 12000/365*261 = 8580.82 under the 'even' method. The total depreciation in the year of addition is 11539.73 (12000/365*351 = 11539.73) and the depreciation not charged for the remaining 261 days is 8580.82. The accumulated depreciation before the month of retirement up to March is 2539.73. This leaves a balance of 9000. 9000 remains to be taken between April and December (1000 per month). The system is saying that of that 9000, 8580.82 will not be charged. This leaves the charge in April as 9000- 8580.82 = 419.18.

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