| # To calculate sum of years digits with switch to straight line deprec. 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 ERP LN 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. If a depreciation method is applied while the Switch To SL checkbox is selected in the Depreciation Methods (tffam7510m000) details session, then the normal straight line calculation is applied independent of the straight line (SL) switch criteria defined in the FAM Parameter (tffam0100s000) 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. the following formulas are used: U.S. tax books:
     DF = (Cost - Salvage - Sec179) * (Business Percentage/100)

     NBV = (Cost - Salvage - Sec179) * (Business Percentage/100) - AD
Other books:
     DF = Cost - Salvage
    	NBV = Cost - Salvage - AD
Sum of Years Digits:
     Depreciation = DF * (remaining years in life / sum of years)
Normal Straight Line:
     Daily Depreciation = NBV * Days depreciated / Days in fiscal year

     Periodic Depreciation = NBV * Periods depreciated / Period in fiscal year
where: DF = Depreciation Factor NBV = Net Book Value AD = Accumulated Depreciation For MACRS and ACRS the salvage value is not applied to depreciation of U.S. tax and commercial books. Note If the asset for which you are calculating depreciation contains an averaging convention, ERP LN 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 Calculations and Averaging Conventions. |