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<ManualTopic ID="/baanerp/tf/onlinemanual/000178" xml:lang="en">
   <Header>
      <Title>To calculate Remaining Life depreciation</Title>
      <Keyword type="header" order="d1e1633435">
         <Level1>Remaining Life Calculations</Level1>
      </Keyword>
      <Keyword type="header" order="d1e1633438">
         <Level1>Calculating</Level1>
         <Level2>Remaining Life</Level2>
      </Keyword>
      <Keyword type="header" order="d1e1633443">
         <Level1>Straight Line</Level1>
         <Level2>Calculations</Level2>
      </Keyword>
   </Header>
   <GeneralSection>
      <Paragraph>In straight-line depreciation, an equal portion of an asset's
		cost is depreciated in each period of its life. Using the straight-line method, LN reduces
		the asset's cost by its salvage value and accumulated depreciation, then
		divides the result by the number of periods in the asset's remaining life in
		order to come up with the depreciation amount for each period.</Paragraph>
      <GeneralSection>
         <SectionTitle>Note</SectionTitle>
         <Paragraph>The straight-line formula always considers remaining life and
		  remaining value when calculating depreciation. If you have not made any
		  adjustments to life, the calculation produces the same results as the standard
		  straight-line depreciation would. If you do adjust life, LN recognizes this and continues to depreciate appropriately.</Paragraph>
      </GeneralSection>
      <GeneralSection>
         <SectionTitle>Example</SectionTitle>
         <Paragraph>A pickup truck used for maintenance at your company has a cost
		  of $20,000, a salvage value of $1,500, and an estimated useful life of 60
		  periods. This is the computation of the annual depreciation expense for this
		  asset in the first year:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph> 
(cost - salvage value - accumulated depreciation)
________________________________________________ = annual depreciation expense per year 
             remaining years of life

</Paragraph>
         </Formula>
         <Paragraph>or</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph>
($20,000 - $1,500)
__________________ = $3,700 
   5 </Paragraph>
         </Formula>
      </GeneralSection>
      <GeneralSection>
         <SectionTitle>Note</SectionTitle>
         <Paragraph>If the asset for which you are calculating depreciation
		  contains an averaging convention, LN adjusts
		  the depreciation expense for the first half-year, quarter, or month
		  calculation. For more information, see the <Link href="/baanerp/tf/onlinemanual/000176" role="manual">Calculations and Averaging Conventions</Link> topic.</Paragraph>
         <Paragraph>Straight line (SL) has two variations based on the
		  calculation mode:</Paragraph>
      </GeneralSection>
      <GeneralSection>
         <SectionTitle>SL Daily</SectionTitle>
         <Paragraph>The SL Daily formula is used when the calculation mode for
		  the selected book is daily. LN calculates the depreciation amount for each
		  period based on the exact number of days the period contains. LN considers
		  remaining cost and remaining value in this calculation.</Paragraph>
         <Paragraph>The SL Daily formula:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph> (cost - salvage value - accumulated depreciation) *
		  (days in period / remaining life in days) </Paragraph>
         </Formula>
      </GeneralSection>
      <GeneralSection>
         <SectionTitle>Example</SectionTitle>
         <Paragraph>Your company has a conveyor with a cost of $10,000, a salvage
		  value of $1,000, and an estimated life of 3 years or 36 periods. The service
		  date for the asset is January 12, 2002. In the first period of the asset's
		  life, the asset was in service for only 20 days. The calculations in the first
		  period are:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph>  ($10,000 - $1,000) * (20 / 1095) = $164.38  ($10,000 - $1,000 - $164.38) * [ 28 / (1095 - 20) ] = $230.14 The
			 accumulated depreciation after two periods is $394.52. </Paragraph>
         </Formula>
         <Paragraph>In the second period of the asset's life, there were 28 days.
		  The calculations in the second period are:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph>($10,000 - $1,000 - $164.38) * [ 28 / (1095 - 20) ] = $230.14</Paragraph>
         </Formula>
         <Paragraph>The accumulated depreciation after two periods is
		  $394.52.</Paragraph>
      </GeneralSection>
      <GeneralSection>
         <SectionTitle>SL Periodic</SectionTitle>
         <Paragraph>The SL Periodic formula is used when the calculation mode for
		  the selected book is periodic. LN divides the year evenly into the number of
		  periods your calendar specifies, then calculates depreciation for each
		  resulting period. LN considers remaining cost and remaining value in this calculation.</Paragraph>
         <Paragraph>The SL Periodic formula:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph> (cost - salvage value - accumulated depreciation) /
			 remaining life in periods </Paragraph>
         </Formula>
      </GeneralSection>
      <GeneralSection>
         <SectionTitle>Example</SectionTitle>
         <Paragraph>Your company has an asset with a cost of $300,000, a salvage
		  value of $45,000, and an estimated life of 10 years or 120 periods. In the
		  first period of the asset's life, the depreciation amount is calculated:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph> ($300,000 - $45,000) * ( 1 / 120) = $255,000 * .0083333 =
			 $2,125.00 </Paragraph>
         </Formula>
         <Paragraph>The depreciation amount accumulated in the first period is
		  $2,125.00. In each subsequent period, LN subtracts
		  the accumulated depreciation from the cost and salvage value and decreases the
		  remaining life. For example, in the second period, this is how LN calculates the depreciation amount:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph>($300,000 - $45,000 - $2,124.99) * (1 / 119) = $2125.00
		  </Paragraph>
         </Formula>
         <Paragraph>The accumulated depreciation after two periods is $4250.00.</Paragraph>
         <Paragraph>Your company has an asset with a cost of $300,000, a salvage
		  value of $45,000, and an estimated life of 10 years or 120 periods. In the
		  first period of the asset's life, the depreciation amount is calculated as
		  follows:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph>($300,000 - $45,000) * ( 1 / 120) = $255,000 * .0083333 = $2,125.00 </Paragraph>
         </Formula>
         <Paragraph>The depreciation amount accumulated in the first period is
		  $2,125.00.</Paragraph>
         <Paragraph>In each subsequent period, LN subtracts
		  the accumulated depreciation from the cost and salvage value and decreases the
		  remaining life. For example, in the second period, this is how LN calculates the depreciation amount:</Paragraph>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph> ($300,000 - $45,000 - $2,124.99) * (1 / 119) = $2125.00
			 </Paragraph>
         </Formula>
         <Paragraph>The accumulated depreciation after two periods is $4250.00.</Paragraph>
      </GeneralSection>
   </GeneralSection>
</ManualTopic>