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<ManualTopic ID="/baanerp/tf/onlinemanual/000191" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">To calculate sum of years digits with switch to straight line deprec.</Title>
		<Keyword><Level1>Sum of Years Digits with Switch to Straight Line Calculalations</Level1>
		</Keyword>
		<Keyword><Level1>SYD with Switch to SL Calculation</Level1>
		</Keyword>
		<Keyword><Level1>Calculating</Level1>
			<Level2>SYD with Switch to SL</Level2>
		</Keyword>
	</Header>
	<GeneralSection><Paragraph>The sum of years digits with a switch to straight line is a formula in which sum of years digits 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 remaining value calculation of the straight line results in a larger depreciation amount than the sum of years digits calculation.</Paragraph>
		<Paragraph>If a depreciation method is applied while the <GUIRef href="" role="manual">Switch To SL</GUIRef> checkbox is selected in the <GUIRef href="/baanerp/tf/fam/tffam7510m000" role="session">Depreciation Methods (tffam7510m000)</GUIRef> details session, then the normal straight line calculation is applied independent of the straight line (SL) switch criteria defined in the <GUIRef href="/baanerp/tf/fam/tffam0100s000" role="session">FAM Parameter (tffam0100s000)</GUIRef> session. The straight-line calculation with remaining-life/remaining-values is not applied, because the large accumulated depreciation at the beginning of the life causes the RL/RV straight-line amount to be reduced so that the switch never occurs.</Paragraph>
		<Paragraph>the following formulas are used:</Paragraph>
		<List><ListItem>U.S. tax books:</ListItem>
		</List>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> DF = (Cost - Salvage - Sec179) * (Business Percentage/100) 

 NBV = (Cost - Salvage - Sec179) * (Business Percentage/100) - AD </Paragraph>
		</Formula>
		<List><ListItem>Other books:</ListItem>
		</List>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> DF = Cost - Salvage
	NBV = Cost - Salvage - AD </Paragraph>
		</Formula>
		<List><ListItem>Sum of Years Digits:</ListItem>
		</List>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> Depreciation = DF * (remaining years in life / sum of years) </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>
		<Paragraph>where:</Paragraph>
		<Paragraph>DF = Depreciation Factor</Paragraph>
		<Paragraph>NBV = <Link href="/baanerp/tf/glossary/glossary#000140" role="glossary">Net Book Value</Link>
		</Paragraph>
		<Paragraph>AD = <Link href="/baanerp/tf/glossary/glossary#000117" role="glossary">Accumulated Depreciation</Link>
		</Paragraph>
		<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>
		<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 halfyearly, quarterly, or monthly calculation. This formula is useful when you want to maximize the tax deduction for the 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. For more information, refer to <Link href="/baanerp/tf/onlinemanual/000176" role="manual">Calculations and Averaging Conventions</Link>.</Paragraph>
		</Note>
	</GeneralSection>
</ManualTopic>
