<?xml version="1.0" encoding="utf-8"?>
<ManualTopic ID="/baanerp/tf/onlinemanual/000189" xml:lang="en">
   <Header>
      <Title>To calculate Declining Balance with Switch to Straight Line
		depreciation</Title>
      <Keyword type="header" order="d1e1984666">
         <Level1>Declining Balance (DB) Calculation</Level1>
      </Keyword>
      <Keyword type="header" order="d1e1984669">
         <Level1>DB with Switch to SL Calculation</Level1>
      </Keyword>
      <Keyword type="header" order="d1e1984672">
         <Level1>Switch to Straight Line</Level1>
      </Keyword>
   </Header>
   <GeneralSection>
      <Paragraph>The declining balance
		with a switch to straight line is a formula in which declining balance is used
		for the first portion of an asset's life, then ERP Enterprise 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 straight
		line remaining value calculation results in a larger depreciation amount than
		the declining balance calculation.</Paragraph>
      <Paragraph>This formula is useful
		if you want to maximize the tax deduction for 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. In the declining balance formula without a switch to straight
		line, the salvage value is disregarded.</Paragraph>
      <Paragraph>If a depreciation method
		is applied with the <GUIRef href="" role="manual">Switch To SL</GUIRef> check box selected in the <GUIRef href="/baanerp/tf/fam/tffam7510m000" role="session">Depreciation Methods (tffam7510m000)</GUIRef> details session, then the straight line
		calculation with remaining-life / remaining-value or the normal straight line
		calculation is applied according to the Straight Line (SL) Switch criteria
		defined in the <GUIRef href="/baanerp/tf/fam/tffam0100s000" role="session">FAM Parameter (tffam0100s000)</GUIRef> session.</Paragraph>
      <Paragraph>The following formulas
		are used:</Paragraph>
      <List>
         <ListItem>U.S. tax books:</ListItem>
      </List>
      <Formula space-and-orientation="indented-estimated">
         <Paragraph> NBV = (Cost - Salvage - Sec179) * (Business Percentage / 100) - AD </Paragraph>
      </Formula>
      <List>
         <ListItem>Other books:</ListItem>
      </List>
      <Formula space-and-orientation="indented-estimated">
         <Paragraph> NBV = Cost - Salvage - AD </Paragraph>
      </Formula>
      <Paragraph>where:</Paragraph>
      <Paragraph>NBV = Net Book Value</Paragraph>
      <Paragraph>AD = Accumulated
		Depreciation</Paragraph>
      <GeneralSection>
         <SectionTitle>Declined balance:</SectionTitle>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph> Daily Depreciation = NBV * (Declined Balance Percentage / 100) * Days Depreciated / Days in Fiscal
			 Year Periodic Depreciation = NBV * (Declined Balance Percentage / 100) * Periods Depreciated / Periods in Fiscal Year </Paragraph>
         </Formula>
         <List>
            <ListItem>Normal Straight Line:</ListItem>
         </List>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph> Daily Depreciation = NBV * Days Depreciated / Days in Fiscal Year Periodic Depreciation = NBV *
			 Periods Depreciated / Period in Fiscal Year </Paragraph>
         </Formula>
         <List>
            <ListItem>Straight Line with Remaining-Life / Remaining-Value:</ListItem>
         </List>
         <Formula space-and-orientation="indented-estimated">
            <Paragraph> Daily Depreciation = NBV * Days Depreciated / Remaining Life Days Periodic Depreciation = NBV * Periods Depreciated / Remaining Life Periods </Paragraph>
         </Formula>
         <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>
      </GeneralSection>
      <Note>
         <SectionTitle>Note</SectionTitle>
         <Paragraph>If the asset for which
		  you are calculating depreciation contains an averaging convention, ERP Enterprise adjusts the
		  depreciation expense for the first half year, quarter, or month calculation.
		  For more information, see the topic, <Link href="/baanerp/tf/onlinemanual/000176" role="manual">Calculations and Averaging Conventions</Link>.</Paragraph>
      </Note>
   </GeneralSection>
</ManualTopic>