<?xml version="1.0" encoding="utf-8"?>
<ManualTopic ID="/baanerp/tf/onlinemanual/000303" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">To use Annuity depreciation</Title>
		<Keyword><Level1>Depreciation by annuity</Level1>
		</Keyword>
	</Header>
	<GeneralSection><Paragraph>A depreciation method that is based on interest rates and that meets European requirements. During the asset life, the depreciation amount increases. The amount is calculated in the calculation book. If there is no depreciation amount in the calculation book, depreciation is not taken into account. The annuity depreciation is calculated as follows:</Paragraph>
		<Paragraph>Annuity = Basis * i * {( 1 + i ) to the power n} / ({( 1 + i ) to the power n} - 1 )</Paragraph>
		<Paragraph>Depreciation = Annuity - i * Basis of Year</Paragraph>
		<Paragraph>where:</Paragraph>
		<Paragraph>Basis = book value at the first year</Paragraph>
		<Paragraph>Basis of Year = book value at the beginning of the actual year</Paragraph>
		<Paragraph>i = interest percentage / 100</Paragraph>
		<Paragraph>n = number of years with annuity depreciation</Paragraph>
		<ExampleSection><SectionTitle>Example</SectionTitle>
			<Paragraph>Basis = 200,000</Paragraph>
			<Paragraph>i = 8 % / 100 = 0.08</Paragraph>
			<Paragraph>n = 5 years</Paragraph>
			<Paragraph>Annuity = 200,000 * 0.08 * 1.08 5 / ( 1.08 5 - 1) = 500,91.29</Paragraph>
			<TABLE border="1"><THEAD><TR><TD>Year</TD>
						<TD>Annuity calculation</TD>
						<TD align="right">Annuity</TD>
					</TR>
				</THEAD>
				<TBODY><TR><TD>1</TD>
						<TD>50,091.29 - 0,08 * 200,000.00</TD>
						<TD align="right">34,091.29</TD>
					</TR>
					<TR><TD>2</TD>
						<TD>50,091.29 - 0.08 * 165,908.71</TD>
						<TD align="right">36,818.59</TD>
					</TR>
					<TR><TD>3</TD>
						<TD>50,091.29 - 0.08 * 129,090.12</TD>
						<TD align="right">39,764.08</TD>
					</TR>
					<TR><TD>4</TD>
						<TD>50,091.29 - 0.08 * 89,326.04</TD>
						<TD align="right">42,945.21</TD>
					</TR>
					<TR><TD>5</TD>
						<TD>50,091.29 - 0.08 * 46,380.83</TD>
						<TD align="right">46,380.82</TD>
					</TR>
					<TR><TD>Sum</TD>
						<TD></TD>
						<TD align="right">199,999.99</TD>
					</TR>
				</TBODY>
			</TABLE>
		</ExampleSection>
	</GeneralSection>
</ManualTopic>
