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<ManualTopic ID="/baanerp/tf/onlinemanual/000189" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">To calculate Declining Balance with Switch to Straight Line depreciation</Title>
		<Keyword><Level1>Declining Balance (DB) Calculation</Level1>
		</Keyword>
		<Keyword><Level1>DB with Switch to SL Calculation</Level1>
		</Keyword>
		<Keyword><Level1>Switch to Straight Line</Level1>
		</Keyword>
	</Header>
	<GeneralSection><Paragraph>The declining balance with a switch to straight line is a formula in which declining balance is used for the first portion of an asset's life, then SSA ERP switches to the straight line formula to depreciate the asset to its salvage value based on its remaining life. The switch occurs in the first period in which the straight line remaining value calculation results in a larger depreciation amount than the declining balance calculation.</Paragraph>
		<Paragraph>This formula is useful if you want to maximize the tax deduction for depreciation expense on your company's income tax returns. This method lets you book a large portion of an asset's depreciation in the early years of its life, then depreciate it to its salvage value. In the declining balance formula without a switch to straight line, the salvage value is disregarded.</Paragraph>
		<Paragraph>If a depreciation method is applied with the <GUIRef href="" role="manual">Switch To SL</GUIRef> check box selected in the <GUIRef href="/baanerp/tf/fam/tffam7510m000" role="session">Depreciation Methods (tffam7510m000)</GUIRef> details session, then the straight line calculation with remaining-life / remaining-value or the normal straight line calculation is applied according to the Straight Line (SL) Switch criteria defined in the <GUIRef href="/baanerp/tf/fam/tffam0100s000" role="session">FAM Parameter (tffam0100s000)</GUIRef> session.</Paragraph>
		<Paragraph>The following formulas are used:</Paragraph>
		<List><ListItem>U.S. tax books:</ListItem>
		</List>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> NBV = (Cost - Salvage - Sec179) * (Business Percentage / 100) - AD </Paragraph>
		</Formula>
		<List><ListItem>Other books:</ListItem>
		</List>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> NBV = Cost - Salvage - AD </Paragraph>
		</Formula>
		<Paragraph>where:</Paragraph>
		<Paragraph>NBV = Net Book Value</Paragraph>
		<Paragraph>AD = Accumulated Depreciation</Paragraph>
		<GeneralSection><SectionTitle>Declined balance:</SectionTitle>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> Daily Depreciation = NBV * (Declined Balance Percentage / 100) * Days Depreciated / Days in Fiscal
			 Year Periodic Depreciation = NBV * (Declined Balance Percentage / 100) * Periods Depreciated / Periods in Fiscal Year </Paragraph>
			</Formula>
			<List><ListItem>Normal Straight Line:</ListItem>
			</List>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> Daily Depreciation = NBV * Days Depreciated / Days in Fiscal Year Periodic Depreciation = NBV *
			 Periods Depreciated / Period in Fiscal Year </Paragraph>
			</Formula>
			<List><ListItem>Straight Line with Remaining-Life / Remaining-Value:</ListItem>
			</List>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> Daily Depreciation = NBV * Days Depreciated / Remaining Life Days Periodic Depreciation = NBV * Periods Depreciated / Remaining Life Periods </Paragraph>
			</Formula>
			<Paragraph>For <Link href="/baanerp/tf/glossary/glossary#000139" role="glossary">MACRS</Link> and <Link href="/baanerp/tf/glossary/glossary#000104" role="glossary">ACRS</Link> the salvage value is not applied to depreciation of U.S. tax and commercial books.</Paragraph>
		</GeneralSection>
		<Note><SectionTitle>Note</SectionTitle>
			<Paragraph>If the asset for which you are calculating depreciation contains an averaging convention, SSA ERP adjusts the depreciation expense for the first half year, quarter, or month calculation. For more information, see the topic, <Link href="/baanerp/tf/onlinemanual/000176" role="manual">Calculations and Averaging Conventions</Link>.</Paragraph>
		</Note>
	</GeneralSection>
</ManualTopic>
