Fiscal
Depreciation Calculation Example Fiscal
Depreciation Calculation ExampleThis topic explains how the system calculates fiscal depreciation when using the degressif method of depreciation for your rental assets.
First, use the Equipment Fiscal Depreciation Coefficient program to set up the table of published French accounting coefficients used to calculate a method of French tax depreciation called degressif. Degressif depreciation is a declining balance method of depreciation using a variable coefficient that is based on the lifetime of an asset and on fiscal legislation rules. This table is used to assign the appropriate coefficient when a new asset is entered in the system.
When using this
method of depreciation, use control record RAEDP4
to turn derogatoire (derogating or declining) journal entries on.
The following table and formulas are used to illustrate the fiscal depreciation of an asset with an acquisition value of 90,000.00 and a depreciation duration of 12 years for the straight-line method and 6 years for the degressif method.
|
Acquisition Value 90,000.00 |
Date of Acquisition 01/01/NN |
|
Book S/L Depreciation Duration 12 |
|
|
Tax Degressif Depreciation Duration 6 |
Fiscal Coefficient 1.75 |
|
|
Book Depreciation (S/L) |
Fiscal Depreciation (Degressif) |
||||||
|
Year |
Yearly Dep |
Net Value |
Dep Rate Degressif |
Dep Rate S/L |
Degressif Dep Amt |
S/L Dep Amt |
Yearly Dep |
Net Value |
|
1 |
7,500.00 |
82,500.00 |
29.17 |
16.67 |
26,250.00 |
15,000.00 |
26,250.00 |
63,750.00 |
|
2 |
7,500.00 |
75,000.00 |
29.17 |
20.00 |
18,593.75 |
12,750.00 |
18,593.75 |
45,156.25 |
|
3 |
7,500.00 |
67,500.00 |
29.17 |
25.00 |
13,170.57 |
11,289.06 |
13,170.57 |
31,985.68 |
|
4 |
7,500.00 |
60,000.00 |
29.17 |
33.33 |
9,329.16 |
10,661.89 |
10,661.89 |
21,323.78 |
|
5 |
7,500.00 |
52,500.00 |
29.17 |
50.00 |
6,219.44 |
10,661.89 |
10,661.89 |
10,661.89 |
|
6 |
7,500.00 |
45,000.00 |
29.17 |
100.00 |
3,109.72 |
10,661.89 |
10,661.89 |
0.00 |
|
7 |
7,500.00 |
37,500.00 |
|
|
|
|
|
|
|
8 |
7,500.00 |
30,000.00 |
|
|
|
|
|
|
|
9 |
7,500.00 |
22,500.00 |
|
|
|
|
|
|
|
10 |
7,500.00 |
15,000.00 |
|
|
|
|
|
|
|
11 |
7,500.00 |
7,500.00 |
|
|
|
|
|
|
|
12 |
7,500.00 |
0.00 |
|
|
|
|
|
|
|
Totals |
90,000.00 |
|
|
|
76,672.63 |
71,024.74 |
90,000.00 |
|
|
Duration of Amortization (Years) |
Acquired Before 01/01/2001 |
Acquired After 01/01/2001 |
|
3 to 4 |
1.5 |
1.25 |
|
5 to 6 |
2.0 |
1.75 |
|
7 + |
2.5 |
2.25 |
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The following formulas and calculations explain the results in the above tables:
fiscalDegDepRate = (1/taxDuration) x fiscalCoefficient x 100%
29.17%= (1/6) x 1.75 x 100%
fiscalSLDepRate = (1/remainingLifetime) x 100%
16.67% = (1/6) x 100%
First Period: fiscalDegDep = acquisitionValue x degDepRate
Subsequent Periods: fiscalDegDep = fiscalNetValue x FiscalDegDepRate
Period 1 Example: 26,250.00*
= 90,000.00 x 29.17%
Period 3 Example: 13,170.57*
= 45,156.25 x 29.17%
*Rounding down and using only whole numbers for calculations
First Period: fiscalSLDep = acquisitionValue x fiscalSLDepRate
Subsequent Periods: fiscalSLDep = fiscalNetValue x fiscalSLDepRate
Period 1 Example: 15,000.00*
= 90,000.00 x 16.67%
Period 4 Example: 10,661.89*
= 31,985.68 x 33.33%
*Rounding down and using only whole numbers for calculations
IF (fiscalDegDep > fiscalSLDep) THEN fiscalDep = fiscalDegDep ELSE fiscalDep = fiscalSLDep
Period 1 Example: Degressif
depreciation at 26,250.00 is greater than the S/L depreciation at 15,000.00,
so the Fiscal depreciation for that period is 26,250.00.
Period 4 Example: Degressif
depreciation at 9,329.16 is less than the S/L depreciation at 10,661.89,
so the Fiscal depreciation for that period is 10,661.89.
fiscalNetValue = acquisitionValue - fiscalDep
Period 1 Example: 63,750.00
= 90,000.00 - 26,250.00
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The derogatoire depreciation that is used to make the general ledger journal entries is calculated as the difference between the fiscal depreciation and the book straight-line depreciation*. The derogatoire depreciation is calculated for each period of the book lifetime (12 years in our example). This means that the derogatoire depreciation will be negative for periods after the fiscal lifetime (6 years in our example). The debit and credit accounts are determined by whether the derogatoire depreciation is negative or positive.
derogDep = fiscalDep - bookDep*
*Book depreciation is a straight-line depreciation calculated in the normal way.
Period 1 Example: 18,750.00
= 26,250.00 - 7,500.00
Period 7 Example: -7,500
= 0 - 7,500.00
Period 1 Derogatoire journal entry:
|
Account |
Debit |
Credit |
|
687200-0000-0000-00 |
18,750.00 |
|
|
145000-0000-0000-00 |
|
18,750.00 |
|
Account |
Debit |
Credit |
|
145000-0000-0000-00 |
7,500.00 |
|
|
787200-0000-0000-00 |
|
7,500.00 |
Period 7 Derogatoire journal entry:
|
Account |
Debit |
Credit |
|
687200-0000-0000-00 |
|
7,500.00 |
|
145000-0000-0000-00 |
37,500.00 |
|
|
Account |
Debit |
Credit |
|
145000-0000-0000-00 |
|
37,500.00 |
|
787200-0000-0000-00 |
7,500.00 |
|
Although TAX depreciation is only run live once a year, the derogatoire depreciation G/L journal entries must be made monthly. This means that if an asset that has been assigned degressif (fiscal) depreciation is sold during the year, an amendment must be made to the derogatoire depreciation that has already been booked.
Equipment Fiscal Depreciation Coefficient
Depreciation Simulation Report
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