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Calculation

Depreciation calculation methods

When you add a new asset, you can define and use custom methods of depreciation or select from the standard methods that are described.

Custom methods

The application lets you define and use up to 99 custom methods for calculating depreciation, and it allows for a fixed percentage in any year of an asset's life.

Standard methods

You can select any of the following standard methods of calculating depreciation. The application handles the calculations automatically as you record the information for each asset.
MACRS
  • Handles 3-, 5-, 7-, 10-, 15-, 20-, 25-, 27.5-, 31.5-, and 39-year class lives.
  • Handles the straight-line method under alternate MACRS.
  • Supports the use of the Alternative Depreciation System.
  • Supports 150% declining balance over regular MACRS lives.
  • Handles ITC transition assets allowing the full ITC amount and reducing the basis by that amount.
  • Handles shortened Indian reservation property lives.
  • Handles farm property depreciation.
  • Tests for and properly calculates mid-quarter convention.
  • Accounts for the partial or complete expensing of section 179 property.
  • Handles Indian Reservation Farm depreciation by supporting 150% declining balance over shortened Indian reservation property lives.
  • Handles the calculation of the bonus depreciation under section 168(k) and 1400N.
ACRS
  • Handles 3-, 5-, 10-, 15-, 18-, and 19-year class life assets using either regular or optional straight-line methods.
  • When you take investment tax credit, the application lets you elect reduced basis or reduced ITC with automatic ITC calculation.
  • Accounts for the partial or complete expensing of section 179 property.
Old law
  • Supports straight-line, 200/150/125% declining balance, units of production, and sum-of-the-years' digits methods.
  • Automatically switches to straight-line method when beneficial. To turn this feature on or off, select
    Setup
    ,
    Options
     then
    Calculation
     and select or clear the
    Continue declining-balance with no switch to straight-line
     checkbox.
  • Properly accounts for pre-1981 assets including additional first-year depreciation and salvage value.
  • Depreciates assets acquired or disposed of based on the following conventions: actual month of transaction, half year, or full year/no year.

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