Example: Calculating Depreciation Using Minimum Rate Only

On August 1st, 2008 you purchased a fixed asset for €100,000. You use a 20% annual depreciation rate. Furthermore, acquisition date is August 1st, 2008 so that depreciation will be calculated from August 2008 on (NOTE: Should the acquisition date fall on a later date, e.g. August 5th, 2008, depreciation can be calculated at the start of the next month - in September.). In addition activation date is also August 1st, 2008. (NOTE: Should the activation date fall on a later date, depreciation can be calculated at the start of the next month - in September.)

Created a depreciation and revaluation report at year-end.

Set last date of accounting period (December 31st, 2008). The whole period is from January till December 2008.

Below you can see indexation factors applied (from the Revaluation Rates register):

Adjustment of fixed asset's value consists of the following: adjusted value from the current report of revaluated write-offs of previous reports.

Below you can see a depreciation and revaluation report for year 2007 (let us assume that the same indexation factors will be applied):

Lines in posting:

where the following can be observed: depreciation = (1,031,000 × 0.2 × 12) ÷ 12 = 206,199.99 revaluation - acquisition = 1,031,000 × 0.072 = 74,232 revaluation – adjustment = (206,199.99 + 85,916.67) × 0.072 = 21,032.40 revaluation – depreciated amount = 17,183.33 × 0.439 = 7,543.48

Accounts for posting: