Custom declining balance with true-up depreciation method—Fixed Assets Management

Fixed Assets Management supports the custom declining balance with true-up method (CDBT) for depreciating assets.

The custom declining balance with true-up method depreciates assets at a user-defined rate while accounting for the asset's entire depreciable cost. You can choose a depreciation rate from 1.00% to 100.00%. This method results in higher depreciation amounts in the early years of an asset's useful life and decreases over time as the asset's book value decreases. In the final period, instead of multiplying the remaining depreciation by the depreciation rate, the remaining depreciation is applied in full. That way, the entire depreciable cost is trued up.

This method is useful for companies that require flexibility in defining depreciation rate while ensuring that the asset’s total depreciable cost is accounted for in the depreciation schedule.

Conventions

This method supports the following conventions:

  • Full month

  • Half year

  • Full year

Impact of book type on posting periods

For Tax books, if the convention is Half year or Full year, Sage Intacct uses the entity’s tax year-end for depreciation posting period dates. If the entity's tax year is not defined, it uses the company’s instead. For example, if the First tax month is July, then the posting periods each year will be on June 30th.

For non-tax books, if the convention is Full month, Sage Intacct uses the First fiscal month defined in Company settings to determine how many periods are in each year. For example, if the first fiscal month is February and the asset is placed in service in November, there are 3 periods in the first year of service (November, December, and January).

Formulas

  • Depreciation for each month of the first year:

    (C−S)×(12−M+1)÷12×DR÷N

  • Depreciation for each month of subsequent years:

    (C−S−AD)×DR÷12

  • Depreciation for each month of the last year:

    (C−S−AD)÷N

Variables

  • C = Asset cost
  • S = Salvage value
  • AD = Sum of accumulated depreciation for the previous years
  • M = Month placed in service (1 = first month of the fiscal year, 2 = second month of the fiscal year, and so on)
  • DR = Depreciation rate
  • N = Number of months in the fiscal year

  • Depreciation for the first year:

    (C−S−AD)×DR÷2

  • Depreciation for each subsequent year:

    (C−S−AD)×DR

  • Depreciation for the last year:

    C−S−AD

Variables

  • C = Asset cost
  • S = Salvage value
  • AD = Total accumulated depreciation
  • DR = Depreciation rate

  • Depreciation for each year:

    (C−S−AD)×DR

  • Depreciation for the last year:

    C−S−AD

Variables

  • C = Asset cost
  • S = Salvage value
  • AD = Total accumulated depreciation
  • DR = Depreciation rate

Examples

Scenario:

  • Depreciation rate: 66.67%

  • Useful life: 36 months

  • Convention: Full month

  • Asset cost: $55,000.00

  • Salvage value: $5,000.00

  • Depreciable cost: $50,000.00

  • In-service date: January 25th, 2024

  • First fiscal month: March

  • Use salvage value: True

The following schedules uses the round-half-up method to calculate amounts. The depreciation entry amounts you see in Intacct may differ by $0.01. Fixed Assets Management automatically adjusts for differences in total accumulated depreciation caused by rounding and distributes those differences across the final months of each fiscal year to ensure the total accumulated depreciation is correct.

Schedule:

Depreciation schedule Depreciation schedule
Period Scheduled posting date Depreciation amount ($) Calculation
1 January 31st, 2024 2,777.92 (50,000.00 depreciable cost − 0.00 accumulated depreciation) × (12 − 11 + 1) ÷ 12 × .6667 depreciation rate ÷ 2 months
2 February 29th, 2024 2,777.92 (50,000.00 depreciable cost − 0.00 accumulated depreciation) × (12 − 11 + 1) ÷ 12 × .6667 depreciation rate ÷ 2 months
3 March 31st, 2024 2,469.24 (50,000.00 depreciable cost − 5,555.83 accumulated depreciation) × .6667 depreciation rate ÷ 12 months
... ... ... ...
14 February 28th, 2025 2,469.24 (50,000.00 depreciable cost − 5,555.83 accumulated depreciation) × .6667 depreciation rate ÷ 12 months
15 March 31st, 2025 823.00 (50,000.00 depreciable cost − 29,630.93 accumulated depreciation) × .6667 depreciation rate ÷ 12 months
... ... ... ...
26 February 28th, 2026 823.00 (50,000.00 depreciable cost − 29,630.93 accumulated depreciation) × .6667 depreciation rate ÷ 12 months
27 March 31st, 2026 493.73 (50,000.00 depreciable cost − 9,875.99 accumulated depreciation) ÷ 10 months
... ... ... ...
36 December 31st, 2026 493.73 (50,000.00 depreciable cost − 9,875.99 accumulated depreciation) ÷ 10 months

Scenario:

  • Depreciation rate: 66.67%

  • Useful life: 3 years

  • Convention: Half year

  • Asset cost: $55,000.00

  • Salvage value: $5,000.00

  • Depreciable cost: $50,000.00

  • In-service date: January 25th, 2024

  • First tax month: January

  • Use salvage value: True

Schedule:

Depreciation schedule Depreciation schedule
Period Scheduled posting date Depreciation amount ($) Calculation
1 December 31st, 2024 16,667.50 (50,000.00 depreciable cost − 0.00 accumulated depreciation) × .6667 depreciation rate ÷ 2
2 December 31st, 2025 22,222.78 (50,000.00 depreciable cost − 16,667.50 accumulated depreciation) × .6667 depreciation rate
3 December 31st, 2026 11,109.72 50,000.00 depreciable cost − 38,890.28 accumulated depreciation

Scenario:

  • Depreciation rate: 66.67%

  • Useful life: 3 years

  • Convention: Half year

  • Asset cost: $55,000.00

  • Salvage value: $5,000.00

  • Depreciable cost: $50,000.00

  • In-service date: June 25th, 2024

  • First tax month: January

  • Use salvage value: True

Schedule:

Depreciation schedule Depreciation schedule
Period Scheduled posting date Depreciation amount ($) Calculation
1 December 31st, 2024 16,667.50 (50,000.00 depreciable cost − 0.00 accumulated depreciation) × .6667 depreciation rate ÷ 2
2 December 31st, 2025 22,222.78 (50,000.00 depreciable cost − 16,667.50 accumulated depreciation) × .6667 depreciation rate
3 December 31st, 2026 7,406.85

(50,000.00 depreciable cost − 38,890.28 accumulated depreciation) × .6667 depreciation rate
4 December 31st, 2027 3,702.87

50,000.00 depreciable cost − 46,297.13 accumulated depreciation

Scenario:

  • Depreciation rate: 66.67%

  • Useful life: 3 years

  • Convention: Full year

  • Asset cost: $55,000.00

  • Salvage value: $5,000.00

  • Depreciable cost: $50,000.00

  • In-service date: January 25th, 2024

  • First tax month: July

  • Use salvage value: True

Schedule:

Depreciation schedule Depreciation schedule
Period Scheduled posting date Depreciation amount ($) Calculation
1 June 30th, 2024 33,335.00 (50,000.00 depreciable cost − 0.00 accumulated depreciation) × .6667 depreciation rate
2 June 30th, 2025 11,110.56 (50,000.00 depreciable cost − 33,335.00 accumulated depreciation) × .6667 depreciation rate
3 June 30th, 2026 3,703.15 (50,000.00 depreciable cost − 44,446.00 accumulated depreciation) × .6667 depreciation rate
4 June 30th, 2027 1,851.30 50,000.00 depreciable cost − 48,148.70 accumulated depreciation