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<ManualTopic ID="/baanerp/tf/onlinemanual/000183" xml:lang="en">
   <Header>
      <Title>To calculate MACRS table depreciation</Title>
      <Keyword type="header" order="d1e1633654">
         <Level1>Calculating</Level1>
         <Level2>MACRS Table</Level2>
      </Keyword>
      <Keyword type="header" order="d1e1633659">
         <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 LN 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 LN rate tables is
		  divided across the periods in the year using the following
		  formulas:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph>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 in-service date of 1/1/2002. Management decides to
			 depreciate it under the MACRS 200% declining balance method with a half year
			 averaging convention. LN 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 LN calculates
			 depreciation as follows:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph>(20% * $10,000) = $2,000 </Paragraph>
            </Formula>
            <Paragraph>LN 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 LN performs the following calculation for that
			 period:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph> $2,000 * (25 / 365) = $136.99</Paragraph>
            </Formula>
            <Paragraph>In the second period of the first year, there were 31 days. LN calculates
			 depreciation as follows:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph>$2,000 * ( 31/365) = $169.86</Paragraph>
            </Formula>
            <Paragraph> LN 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, LN substitutes the
			 number of days from the in-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, LN calculates
			 that there were only 56 days in the first tax year. LN 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, LN uses the rate tables
			 to determine that the rate for this year should be 32%. LN calculates the yearly
			 depreciation expense as follows:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph>(32% * $10,000) = $3,200 </Paragraph>
            </Formula>
            <Paragraph>The first period in year two has 31 days, so LN calculates
			 depreciation for the period as follows:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph>$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 LN rate tables is divided evenly across each
		  period in the year, using the following formulas:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph>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 in-service date of January 1, 2001. Management decides to
			 depreciate it under the MACRS 200% declining balance method with a half year
			 averaging convention. LN 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 LN calculates
			 depreciation as follows:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph>(20% * $10,000) = $2,000</Paragraph>
            </Formula>
            <Paragraph>LN 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, LN performs the
			 following calculation:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph>$2,000 / 12 = $166.67</Paragraph>
            </Formula>
            <Paragraph> LN divides this amount evenly from the in-service date to the end of the first
			 fiscal year.</Paragraph>
            <List>
               <ListItem>Year Two</ListItem>
            </List>
            <Paragraph>For the second year, LN 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 space-and-orientation="indented-estimated">
               <Paragraph>(32% * $10,000) = $3,200</Paragraph>
            </Formula>
            <Paragraph>For each period in the second year, LN performs the
			 following calculation:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph> $3,200 / 12 = $266.67</Paragraph>
            </Formula>
            <Paragraph> LN records a depreciation expense of $266.67 in each period of year two.</Paragraph>
         </ExampleSection>
      </GeneralSection>
   </GeneralSection>
</ManualTopic>