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<ManualTopic ID="/baanerp/tf/onlinemanual/000183" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">To calculate MACRS table depreciation</Title>
		<Keyword><Level1>Calculating</Level1>
			<Level2>MACRS Table</Level2>
		</Keyword>
		<Keyword><Level1>MACRS</Level1>
			<Level2>Table Calculations</Level2>
		</Keyword>
	</Header>
	<GeneralSection><List><ListIntro>Modified Accelerated Cost Recovery System (MACRS) table depreciation uses the rate tables in SSA ERP to determine the yearly depreciation percentages for each year in an asset's life. In the first year, the yearly percentage is applied and the result is then divided across each period from the beginning of the recovery period to the end of the year. In subsequent years, the result is divided across each period in the year to come up with the appropriate depreciation expenses. There are two variations of MACRS table depreciation:</ListIntro>
			<ListItem><Link href="#A" role="internal">MACRS Table Daily</Link>
			</ListItem>
			<ListItem><Link href="#B" role="internal">MACRS Table Periodic</Link>
			</ListItem>
		</List>
		<GeneralSection ID="A"><SectionTitle>MACRS Table Daily</SectionTitle>
			<Paragraph>In the 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 formulas:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">yearly depreciation = yearly depreciation percentage * cost 

depreciation for each period = 
yearly depreciation amount * (days in period / days in tax year) </Paragraph>
			</Formula>
			<ExampleSection><SectionTitle>Example of MACRS Table Daily</SectionTitle>
				<List><ListItem>Year One</ListItem>
				</List>
				<Paragraph>Your company uses a conveyor with a cost of $10,000, a life of five years, and a service date of 1/1/2002. Management decides to depreciate it under the MACRS 200% declining balance method with a half year averaging convention. SSA ERP uses the rate tables to determine the percentage used in calculating the annual percentage in each year.</Paragraph>
				<Paragraph>In the first year, the rate is 20% and SSA ERP calculates depreciation as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">(20% * $10,000) = $2,000 </Paragraph>
				</Formula>
				<Paragraph>SSA ERP then calculates the depreciation expense for each period in that year according to how many days were in each period. In the first period of the asset's life there were only 25 days, so SSA ERP performs the following calculation for that period:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> $2,000 * (25 / 365) = $136.99</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">$2,000 * ( 31/365) = $169.86</Paragraph>
				</Formula>
				<Paragraph>SSA ERP records a depreciation expense of $136.99 in the first period of year one, and an expense of $169.86 in the second period. If an asset is placed in service at any time other than the first day of the tax year, SSA ERP substitutes the number of days from the service date to the end of the tax year for the number 365 in the calculations listed above.</Paragraph>
				<Paragraph>For example, if the asset were placed in service on November 6, 2002, SSA ERP calculates that there were only 56 days in the first tax year. SSA ERP would use 25/56 in the first calculation and 31/56 in the second calculation.</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 32%. SSA ERP calculates the yearly depreciation expense as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">(32% * $10,000) = $3,200 </Paragraph>
				</Formula>
				<Paragraph>The first period in year two has 31 days, so SSA ERP calculates depreciation for the period as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">$3,200 * (31 / 365) = $271.78
		  </Paragraph>
				</Formula>
			</ExampleSection>
		</GeneralSection>
		<GeneralSection ID="B"><SectionTitle>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 formulas:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">yearly depreciation = yearly depreciation percentage * cost 

depreciation for each period = yearly depreciation amount / periods in year
			 </Paragraph>
			</Formula>
			<ExampleSection><SectionTitle>Example of MACRS Table Periodic</SectionTitle>
				<List><ListItem>Year One</ListItem>
				</List>
				<Paragraph>Your company uses a conveyor with a cost of $10,000, a life of five years, and a service date of January 1, 2001. Management decides to depreciate it under the MACRS 200% declining balance method with a half year averaging convention. SSA ERP uses the rate tables to determine the percentage used in calculating the annual percentage in each year.</Paragraph>
				<Paragraph>In the first year, the rate is 20% and SSA ERP calculates depreciation as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">(20% * $10,000) = $2,000</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. For each period in the first year, SSA ERP performs the following calculation:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">$2,000 / 12 = $166.67</Paragraph>
				</Formula>
				<Paragraph>SSA ERP divides this amount evenly from the service date to the end of the first fiscal year.</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 32%. It calculates the yearly depreciation expense as follows:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">(32% * $10,000) = $3,200</Paragraph>
				</Formula>
				<Paragraph>For each period in the second year, SSA ERP performs the following calculation:</Paragraph>
				<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> $3,200 / 12 = $266.67</Paragraph>
				</Formula>
				<Paragraph>SSA ERP records a depreciation expense of $266.67 in each period of year two.</Paragraph>
			</ExampleSection>
		</GeneralSection>
	</GeneralSection>
</ManualTopic>
