| Calculating Annuity Depreciation |  |
| Annuity is a method commonly used to meet European requirements. Similar to the concept of a loan, the amount recorded for depreciation is based on the interest rate. The amount of depreciation increases over the life of the asset. The interest amount is calculated in the Calculatory book only, otherwise, it is ignored. The depreciation for an annuity method is calculated as follows:
                                                                  n
                              i x Total Depreciation Amount x (1+i)
                Annuity  =  -------------------------------------------
                                                        n
                                            (1+i)   -  1
               Depreciation = Annuity - (i x Book Value Start of Year  )
where: i = Interest rate percentage / 100 n = Annuity number of years |