Post Recovery Adjustment Example
Let’s look at an example of a Post Recovery adjustment. Assume you entered an asset with the following attributes:
|
Property Type: |
P |
|
Placed-in-Service: |
1/1/2004 |
|
Acquired Value: |
$10,000 |
|
DepreciationMethod: |
SL |
|
EstimatedLife: |
7 years |
|
Beginning Date: |
12/2004 |
|
Beginning YTD: |
$1,000 |
|
Beginning Accum: |
$1,000 |
|
Calculated Depreciation |
$1,428.57 |
|
Calculated Adjustment |
$428.57 |
Note that the system calculates that depreciation for one year is $1,428.57. Because you entered only $1,000 in the Beginning Accumulated Depreciation field, you have not taken as much depreciation as you are entitled to take in the first year of the asset’s life. Therefore, the system calculates an adjustment of $428.57.
If the Adjustment Convention on the Book Overrides tab of the Edit Company dialog is set to Post Recovery, then the adjustment amount would be claimed in the first period after the recovery period as illustrated below:
|
|
PIS |
Beg. Date |
|
|
|
|
|
End of Life |
Post-recovery adjustment |
|
|
1/1/2004 |
12/2004 |
12/2005 |
12/2006 |
12/2007 |
12/2008 |
12/2009 |
12/2010 |
12/2011 |
|
SL Depr |
|
$1,000 |
$1,428.57 |
$1,428.57 |
$1,428.57 |
$1,428.57 |
$1,428.57 |
$1,428.58 |
$0.00 |
|
Adjustment |
|
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$428.57 |
|
Accum |
|
$1,000 |
$2,428.57 |
$3,857.14 |
$5,285.71 |
$6,714.28 |
$8,142.85 |
$9,571.43 |
$10,000.00 |
|
Net Value |
|
$9,000 |
$7,571.43 |
$6,142.86 |
$4,714.29 |
$3,285.72 |
$1,857.15 |
$428.57 |
$0.00 |