Depreciation Method Setup Window
Follow the guidelines provided below to complete the fields on the Depreciation Method Setup window.
Items in this window
| Item | Notes |
|---|---|
| Disposal Method Convention | Use this field to select a disposal year averaging convention. The default disposal year convention is full month. The following disposal year conventions are available: Note: The system uses the selected averaging convention only in the disposal year. The averaging convention for the placed-in-service year must be calculated as part of the first year percentage. |
| Percent (%) | For each year, use this field to enter the percentage of depreciation to be taken in that year. Year 1 is the year you placed the asset in service, and you can enter percentages for up to 60 years. Enter the percentage as a whole number or a whole number with a decimal; for example, enter 10% as 10, and enter 14.5% as 14.5. Note: For the placed-in-service year, the asset always receives a full year's depreciation, no matter when the asset is placed in service. For example, suppose you enter 20% in the Percent Field for Year 1. Even if you place the asset in service on the last day of the year, the application would multiply the asset's depreciable basis by 20% for the first year. If you want the asset to receive only partial depreciation for the first year, you must enter a smaller percentage. You should not enter a percentage greater than 100.000. As you enter the percentages for each year, notice the change in the two display fields at the bottom of the window. |
| Total Percentage | The system uses this field to show the total percentage of depreciation for all years entered thus far. This amount cannot exceed 100.000. |
| Remaining Percentage | The system uses this field to show the difference between the total percentage and 100.000 (100% depreciation). |
For most depreciation methods, when you finish entering annual percentages the total percentage should be 100.000 and the remaining percentage should be zero. You can, however, create a depreciation method that does not fully depreciate assets.
When the application calculates depreciation, it applies the percentage entered for each year to the depreciable basis of the asset and evenly distributes the depreciation amount over the 12-month period.
When you have entered the percentages, select OK to save your data and return to the Custom Depreciation Methods window. The new custom depreciation method appears in the list box.