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<ManualTopic ID="/baanerp/tf/onlinemanual/000185" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">To calculate Alt. Modified Accelerated Cost Recovery System depr.</Title>
		<Keyword><Level1>Alt. Modified Accelerated Cost Recovery System (MACRS) Calculations</Level1>
		</Keyword>
		<Keyword><Level1>Alt. MACRS Calculations</Level1>
		</Keyword>
		<Keyword><Level1>Calculating</Level1>
			<Level2>Alt. MACRS</Level2>
		</Keyword>
	</Header>
	<GeneralSection><List><ListIntro>Alternative Modified Accelerated Cost Recovery System (ALT MACRS) table depreciation uses the monthly or yearly rate information to determine the depreciation percentages for each year in an asset's life. The percentage is applied and the result is then divided across each period in the year to come up with the appropriate depreciation expenses. ALT MACRS calculations usually apply to only Alternative Minimum Tax (AMT) and Adjustment Current Earnings (ACE) type books. These methods should be used in accordance with United States Internal Revenue Service rules and tax regulations. There are two variations of ALT MACRS table depreciation:</ListIntro>
			<ListItem><Link href="#A" role="internal">ALT MACRS Table Daily</Link>
			</ListItem>
			<ListItem><Link href="#B" role="internal">ALT MACRS Table Periodic</Link>
			</ListItem>
		</List>
		<GeneralSection ID="A"><SectionTitle>ALT MACRS Table Daily</SectionTitle>
			<Paragraph>In the ALT MACRS Table Daily formula, the yearly depreciation amount determined using a percentage from the SSA ERP rate tables is divided across the periods in the year using the following formula:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">yearly depreciation = yearly depreciation percentage * cost </Paragraph>
			</Formula>
			<Paragraph>To calculate the depreciation for each period:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">period depreciation = yearly depreciation amount * (days in period / days in year) </Paragraph>
			</Formula>
			<GeneralSection><SectionTitle>Example of ALT MACRS Table Daily</SectionTitle>
				<List><ListItem>Year one</ListItem>
				</List>
				<Paragraph>Your company uses a truck subject to alternative MACRS tax reporting. The truck has a cost of 28,500, a class life of 5.0 years and a service date of February 13, 1998. It is depreciated using the half year convention, and it was placed in service during the first half of the fiscal year. Management decides to depreciate it using the ALT MACRS tables.</Paragraph>
				<Paragraph>SSA ERP uses the rate tables to determine the percentage used in calculating the annual percentage in each year. In the first year, the rate is 15% and SSA ERP calculates depreciation as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">(15% * $28,500) = $4,275 </Paragraph>
				</Formula>
				<Paragraph>SSA ERP then calculates the depreciation expense for each period in that year according to the number of days in each period. In the first period of the asset's life, there were only 15 days, and there were only 321 days in the first year.</Paragraph>
				<Paragraph>SSA ERP performs the following calculation for the first period:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">$4,275 * (15 / 321) = $4,275 * .046758972 = $199.77</Paragraph>
				</Formula>
				<Paragraph>In the second period of the first year, there were 31 days. SSA ERP calculates depreciation as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> 
 $4,275 * (31 / 321) = $4,275 * .084931507 = $363.08 </Paragraph>
				</Formula>
				<List><ListItem>Year two</ListItem>
				</List>
				<Paragraph>For the second year, SSA ERP uses the rate tables to determine that the rate for this year should be 25.50%. It calculates the yearly depreciation expense as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">(25.50% * 28,500) = $7,267.50 </Paragraph>
				</Formula>
				<Paragraph>In the first period of year two, there are 31 days, so SSA ERP calculates depreciation for the period as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">$7,267.50 * ( 31 / 365) = $617.07</Paragraph>
				</Formula>
			</GeneralSection>
		</GeneralSection>
		<GeneralSection ID="B"><SectionTitle>ALT MACRS Table Periodic</SectionTitle>
			<Paragraph>In MACRS Table Periodic formula, the yearly depreciation amount determined from the SSA ERP rate tables is divided evenly across each period in the year using the following formula:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">yearly depreciation = yearly depreciation percentage * cost </Paragraph>
			</Formula>
			<Paragraph>To calculate the depreciation for each period:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">Period depreciation = early depreciation amount / periods in year</Paragraph>
			</Formula>
			<ExampleSection><SectionTitle>Example of ALT MACRS Table Periodic</SectionTitle>
				<List><ListItem>Year One</ListItem>
				</List>
				<Paragraph>Your company has a truck subject to alternative MACRS tax reporting. The truck has a cost of 28,500, a class life of 5.0 years and a service date of February 13, 1998. It is depreciated using the half year convention, and it was placed in service during the first half of the fiscal year. Management decides to depreciate it using the ALT MACRS tables.</Paragraph>
				<Paragraph>SSA ERP uses the rate tables to determine the percentage used in calculating the annual percentage in each year. In the first year, the rate is 15% and SSA ERP calculates depreciation as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">(15% * $28,500) = $4,275</Paragraph>
				</Formula>
				<Paragraph>SSA ERP then calculates the depreciation expense for each period in the year, without regard to the number of days in each period. There are only eleven periods in the first year of the asset's life. For each period in the first year, SSA ERP performs the following calculation:</Paragraph>
				<Paragraph>$4,275 / 11 = $388.64</Paragraph>
				<Paragraph>SSA ERP records a depreciation expense of $388.64 in each period of year one.</Paragraph>
				<List><ListItem>Year Two</ListItem>
				</List>
				<Paragraph>For the second year, SSA ERP uses the rate tables to determine that the rate for this year should be 25.5%. It calculates the yearly depreciation expense as follows:</Paragraph>
			</ExampleSection>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">	 (25.50% * $28,500) = $7,267.50</Paragraph>
			</Formula>
			<Paragraph>For each period in the second year, SSA ERP performs the following calculation:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">
 $7,267.50 / 12 = $605.63 
			 </Paragraph>
			</Formula>
			<Paragraph>SSA ERP records a depreciation expense of $605.63 in each period of year two.</Paragraph>
		</GeneralSection>
	</GeneralSection>
</ManualTopic>
