Belgian standard depreciation method description

This document is an appendix to the documentation on the setup of Depreciation methods.

In standard, Sage X3 comes with a number of depreciation methods.

Some are associated with a given legislation, while others are common to all legislations.

This document describes the calculation principles of the depreciation methods associated with the Belgian legislation.

The other methods are described in appendix documentations, which can be accessed from the documentation on the depreciation methods common to all legislations.

LB - Belgian straight-line

It is the straight-line depreciation method applied according to Belgian rules. For some fixed assets, you can carry out an annual depreciation equal to the double of the standard straight-line annuity.

Example 1:

  • Gross value: 10,000
  • Residual value: 0
  • Depreciation start date: 03/06/2005
  • Depreciation duration: 5 years --> Rate: 20%
  • Specificity: no prorata temporis is applied
  • Depreciation end date: 31/12/2009

Fiscal year

Net value

Fiscal year charge

Fiscal year total

01/01/2005 – 31/12/2005

10,000.00

2,000.00 (1)

2,000.00

01/01/2006 – 31/12/2006

8,000.00

2,000.00

4,000.00

01/01/2007 – 31/12/2007

6,000.00

2,000.00

6,000.00

01/01/2008 – 31/12/2008

4,000.00

2,000.00

8,000.00

01/01/2009 – 31/12/2009

2,000.00

2,000.00

10,000.00

(1) 10,000.00 * 20% = 2,000.00 (no prorata temporis is applied)

If the asset was disposed of on 14/05/2008, the fiscal year 2008 charge is 0 because, without applying a prorata temporis, no depreciation is calculated for the disposal fiscal year.

Example 2:

  • Gross value: 10,000
  • Residual value: 0
  • Depreciation start date: 05/11/2005
  • Depreciation duration: 5 years --> Rate: 20%
  • Specificity: application of a prorata temporis in months
  • Depreciation end date: 31/10/2010

Fiscal year

Net value

Fiscal year charge

Fiscal year total

01/01/2005 – 31/12/2005

10,000.00

333.33 (1)

333.33

01/01/2006 – 31/12/2006

9,666.67

2,000.00

2,333.33

01/01/2007 – 31/12/2007

7,666.67

2,000.00

4,333.33

01/01/2008 – 31/12/2008

5,666.67

2,000.00

6,333.33

01/01/2009 – 31/12/2009

3,666.67

2,000.00

8,333.33

01/01/2010 – 31/12/2010

1,666.67

1,666.67 (2)

10,000.00

(1) 10,000.00 * 20% * 2/12 since the asset is held for only 2 months during this first fiscal year.

(2) Fiscal year charge = Net depreciable value since Depreciation end date < Fiscal year end date.

If the asset was issued on 14/05/2008, the fiscal year 2008 charge would be equal to:

10,000.00 * 20% * 4 / 12 = 666.67

Applying a prorata temporis in months means the depreciation charge is calculated up to the last day of a month, in this example, the month preceding the disposal.

Example 3:

  • Gross value: 10,000
  • Residual value: 0
  • Depreciation start date: 05/11/2005
  • Depreciation duration: 5 years --> Rate: 20%
  • Specificity: application of a prorata temporis in months
  • Depreciation end date: 04/11/2010

Fiscal year

Net value

Fiscal year charge

Fiscal year total

01/01/2005 – 31/12/2005

10,000.00

312.33 (1)

312.33

01/01/2006 – 31/12/2006

9,687.67

2,000.00

2,312.33

01/01/2007 – 31/12/2007

7,687.67

2,000.00

4,312.33

01/01/2008 – 31/12/2008

5,687.67

2,000.00

6,312.33

01/01/2009 – 31/12/2009

3,687.67

2,000.00

8,312.33

01/01/2010 – 31/12/2010

1,687.67

1,687.67 (2)

10,000.00

(1) 10,000.00 * 20% * 57/365 since the asset is held for only 57 days during this first fiscal year.

(2) Fiscal year charge = Net depreciable value since Depreciation end date < Fiscal year end date

If the asset was issued on 14/05/2008, the fiscal year 2008 charge would be equal to:

10,000.00 * 20% * 135 days / 366 days = 737.70

Applying a prorata temporis in days results in the calculation of a depreciation charge until the issue day.

Example 4:

  • Gross value: 10,000
  • Residual value: 0
  • Depreciation start date: 05/11/2005
  • Depreciation duration: 5 years --> Rate: 20%
  • Specificity 1: no prorata temporis is applied
  • Specificity 2: the company chose to double the straight-line depreciation charge on the first 2 fiscal years
  • Depreciation end date: 31/12/2009

Fiscal year

Net value

Fiscal year charge

Fiscal year end total

01/01/2005 – 31/12/2005

10,000.00

4,000.00 (1)

4,000.00

01/01/2006 – 31/12/2006

6,000.00

4,000.00 (2)

8,000.00

01/01/2007 – 31/12/2007

2,000.00

666.67 (3)

8,666.67

01/01/2008 – 31/12/2008

1,333.33

666.67

9,333.34

01/01/2009 – 31/12/2009

666.66

666.66

10,000.00

(1) 10,000.00 * 20% * 2 (no prorata temporis is applied and the straight-line depreciation charge is doubled)

(2) 10,000.00 * 20% * 2 (the straight-line depreciation charge is doubled)

(3) Net value 2,000.00 / 3 years = 666.67, considering the return to a standard situation after doubling the straight-line depreciation.

Depreciation origin

The depreciation origin depends on whether to apply the option Prorata temporis and, where appropriate, on the type of prorata selected:

  • If the Prorata temporis in months option is selected, the origin is the first day of the month specified in the depreciation start date.
  • If the Prorata temporis in days option is selected, the origin is the day specified in the depreciation start date.
  • If no prorata is applied, a complete annuity is retained for the acquisition fiscal year.

Duration

You can specify either the duration, or the rate.

If you specify the duration, Sage X3 automatically determines the depreciation rate as well as the depreciation end date based on this duration.

If you specify the rate, the depreciation duration is automatically determined based on the entered rate.

The duration is expressed in years and hundredths of years.

Example: 6.66 or 6.67 for a duration of 6 years 2/3.

For this depreciation method, Sage X3 will round to 2 decimals all the durations entered or imported with more than 2 decimals. The same applies for residual durations calculated in the framework of intra-group sales.

Rate

You can specify the rate.

In this case, Sage X3 determines the depreciation duration based on the rate entered. This determined duration is used to calculate the depreciation end date.

When you do not specify the depreciation rate, Sage X3 determines it as follows: 1 / duration with a rounding on the second decimal.

By using the application of a Specific rule at the depreciation method level, you can select to double the straight-line depreciation on some fixed assets during a maximum of 3 successive fiscal years. If this choice is specified for the first fiscal year, it is automatically reused for the second and third fiscal years.

This automatic reuse can be canceled using the Method change action.

Depreciation end date

The depreciation end date depends on whether the Prorata temporis in months or Prorata temporis in days option is specified at the method setup level:

  • If the prorata temporis is expressed in months: Depreciation end date = first day of the month o f the depreciation start date + depreciation duration in months. This makes the depreciation end date correspond to the last day of a month.
  • If the prorata temporis is expressed in days: Depreciation end date = depreciation start date + depreciation duration.
  • If no prorata is applied: Depreciation end date = first day of the acquisition fiscal year + depreciation duration. This makes the depreciation end correspond to the last day of a month.

Prorata temporis

Time is expressed in months or days depending on what you select.

If the Prorata temporis in months or the Prorata temporis in days option has been specified at the method setup level:

  • A prorata temporis is applied to determine the charge of the first fiscal year in the case where the depreciation origin is not the first day of the fiscal year, or in the case where the fiscal year duration differs from 12 months.
  • A prorata temporis is applied to determine the charge of the disinvestment fiscal year. The charge is calculated until the end of the month that precedes the disposal, if the disposal date is not the end of a month and the prorata is determined in months, or until the disposal date if it corresponds to the end of a month or if the prorata temporis is determined in days. This rule can be modified by Disposal rules: No depreciation charge on the disposal day, Disposal at the end of the previous FY and Disposal at the end of the current FY.

In case where the company has not specified a prorata temporis:

  • The charge of the first fiscal year will be equal to a complete annuity.
  • No charge will be calculated for the disinvestment fiscal year. This rule can be affected by the Disposal rule: Disposal at the end of the current FY.

Whether the application of a prorata temporis is specified or not:

  • A prorata temporis will be applied to determine the charge of a fiscal year whose duration differs from 12 months.

Depreciation charges

The fiscal year charge is equal to:

Depreciable value * straight-line rate * prorata temporis * 2 if the depreciation doubling has been specified

A Prorata temporis expressed in months or in days is applied when the option is specified at the depreciation method level and for a fiscal year different from 12 months.

The number of holding months is different from 12 in the following situations:

  • The Depreciation start date is beyond the fiscal year start date.
  • The fiscal year Duration differs from 12 months.
  • The Disposal date of the asset is in the interval [Fiscal year start date – Fiscal year end date].

If you retained the straight-line depreciation doubling, a return to a standard straight-line depreciation is carried out on the net depreciable value.

The fiscal year charge will thus be equal to:

Net depreciable value / Residual depreciation duration * prorata temporis

A Prorata temporis expressed in months or in days is applied when the option is specified at the depreciation method level and for a fiscal year different from 12 months.

The number of holding months will be different from 12 in the following situations:

  • The fiscal year Duration differs from 12 months.
  • The Disposal date of the asset is in the interval [Fiscal year start date – Fiscal year end date].

It is important to note that:

  • Depreciable value = Gross value – Residual value
  • Net depreciable value = Net value – Residual value

If the depreciation end date determined by Sage X3 is inferior or equal to the fiscal year end date, the fiscal year charge is automatically loaded with the net depreciable value in order to close the depreciation.

Distribution of the fiscal year charge on the periods

If the fiscal year is divided into several periods, the fiscal year charge is distributed over these periods as follows:

Period Charge pc = Fiscal year charge * ( Σ p1 to pc ( (Period weight / Number of days or months in the period) * Number of holding days or months in the period ) / Σ p1 to pc ( (Period weight / Number of days or months in the period) * Number of holding days or months in the period ) ) - Depreciation total of previous periods

p1 to pc = from the first holding period in the fiscal year to the current period included (1)

p1 to pf = from the first holding period in the fiscal year to the last holding period in the fiscal year

(1) Unless the asset is issued in the fiscal year before this current period or if it is completely depreciated in the fiscal year before this current period. The period retained is thus the minimum period among:

  • The period of depreciation end if the Depreciation end date belongs to the interval [period start – period end]
  • The disposal period if the Disposal date belongs to the interval [period start – period end]
  • The current period

DB - Belgian declining

It is the declining depreciation method applied according to Belgian rules. This depreciation method is optional. If a Belgian company does not choose this method, it will be able to apply only the straight-line method.

Example 1:

  • Gross value: 10,000
  • Residual value: 0
  • Depreciation start date: 03/06/2005
  • Depreciation duration: 5 years, declining factor: 1.5 --> Rate: 30%
  • Specificity: no prorata temporis is applied
  • Depreciation end date: 31/12/2009

Fiscal year

Net value

Fiscal year charge

Fiscal year total

01/01/2005 – 31/12/2005

10,000.00

3,000.00 (1)

3,000.00

01/01/2006 – 31/12/2006

7,000.00

2,100.00

5,100.00

01/01/2007 – 31/12/2007

4,900.00

2,000.00 (2)

7,100.00

01/01/2008 – 31/12/2008

2,900.00

2,000.00

9,100.00

01/01/2009 – 31/12/2009

900.00

900.00 (3)

10,000.00

(1) 10,000.00 * 30% = 3,000.00 (no prorata temporis is applied)

(2) 10,000.00 * 20% = 2,000.00 > 4,900.00 * 30% = 1,470.00

(3) The Depreciation end date is in this fiscal year. The Fiscal year charge is thus equal to the Net depreciable value

Example 2:

  • Gross value: 10,000
  • Residual value: 0
  • Depreciation start date: 05/11/2005
  • Depreciation duration: 5 years, declining factor: 2 --> Rate: 40%
  • Specificity: the option Prorata temporis in months is applied
  • Depreciation end date: 31/10/2010

Fiscal year

Net value

Fiscal year charge

Fiscal year total

01/01/2005 – 31/12/2005

10,000.00

666.67 (1)

666.67

01/01/2006 – 31/12/2006

9,333.33

3,733.33

4,400.00

01/01/2007 – 31/12/2007

5,600.00

2,240.00

6,640.00

01/01/2008 – 31/12/2008

3,360.00

2,000.00 (2)

8,640.00

01/01/2009 – 31/12/2009

1,360.00

1,360.00 (3)

10,000.00

01/01/2010 – 31/12/2010

0.00

0.00 (4)

10,000.00

(1) 10,000.00 * 40% * 2/12 since the asset is held for only 2 months during this first fiscal year

(2) 10,000.00 * 20% = 2,000.00 > 3,360.00 * 40% = 1,344.00

(3) 10,000.00 * 20% = 2,000.00 set to the value of the net depreciable value, that is 1,360.00

(4) Even though the depreciation end date is in this fiscal year, the depreciation is nevertheless closed in the previous fiscal year

Example 3:

  • Gross value: 10,000
  • Residual value: 0
  • Depreciation start date: 05/01/2005
  • Depreciation duration: 5 years, declining factor: 2 --> Rate: 40%
  • Specificity: the option Prorata temporis in months is applied
  • Depreciation end date: 31/12/2009

Fiscal year

Net value

Fiscal year charge

Fiscal year total

01/01/2005 – 31/12/2005

10,000.00

4,000.00 (1)

4,000.00

01/01/2006 – 31/12/2006

6,000.00

2,400.00

6,400.00

01/01/2007 – 31/12/2007

3,600.00

2,000.00 (2)

8,400.00

01/01/2008 – 31/12/2008

1,600.00

1,600.00 (3)

10,000.00

01/01/2009 – 31/12/2009

0.00

0.00 (4)

10,000.00

(1) 10 000,00 * 40% * 12/12 since the asset is held for 12 months during this first fiscal year

(2) 10,000.00 * 20% = 2,000.00 > 3,600.00 * 40% = 1,440.00

(3) 10,000.00 * 20% = 2,000.00 reduced to the value of the net depreciable value, that is, 1,600.00

(4) Even though the depreciation end date is in this fiscal year, the depreciation is nevertheless closed in the previous fiscal year

Example 4:

  • Gross value: 10,000
  • Residual value: 0
  • Depreciation start date: 05/01/2005
  • Depreciation duration: 5 years, declining factor: 2 --> Rate: 40%
  • Specificity: the option Prorata temporis in months is applied
  • Depreciation end date: 31/12/2009
  • Asset disposal date: 30/06/2008

Fiscal year

Net value

Fiscal year charge

Fiscal year total

01/01/2005 – 31/12/2005

10,000.00

4,000.00 (1)

4,000.00

01/01/2006 – 31/12/2006

6,000.00

2,400.00

6,400.00

01/01/2007 – 31/12/2007

3,600.00

2,000.00 (2)

8,400.00

01/01/2008 – 31/12/2008

1,600.00

800.00 (3)

9,200.00

(1) 10 000,00 * 40% * 12/12 since the asset is held for 12 months during this first fiscal year

(2) 10,000.00 * 20% = 2,000.00 > 3,600.00 * 40% = 1,440.00

(3) 10,000.00 * 20% = 2,000.00 reduced to the value of the net depreciable value, that is, 1,600.00 * 6/12 = 800,00

Example 5:

  • Gross value: 10,000
  • Residual value: 0
  • Depreciation start date: 15/02/2005
  • Depreciation duration: 4 years, declining factor: 2 --> Rate: 50%
  • Specificity: no prorata temporis is applied
  • Depreciation end date: 31/12/2008

Fiscal year

Net value

Fiscal year charge

Fiscal year total

01/01/2005 – 31/12/2005

10,000.00

4,000.00 (1)

4,000.00

01/01/2006 – 31/12/2006

6,000.00

3,000.00 (2)

7,000.00

01/01/2007 – 31/12/2007

3,000.00

2,500.00 (3)

9,500.00

01/01/2008 – 31/12/2008

500.00

500.00 (4)

10,000.00

(1) 10 000,00 * 50% * 12/12th = 5 000,00 > Gross value 10 000,00 * 40% = 4 000,00

(2) 6,000.00 * 50% = 3,000.00

(3) 10,000.00 * 25% = 2,500.00 > 3,000.00 * 50% = 1,500.00

(4) 10,000.00 * 25% = 2,500.00 reduced to the value of the net depreciable value, that is, 500.00

Depreciation origin

If the Prorata temporis in months or the Prorata temporis in days option has been specified at the method setup level, the declining depreciation origin is the first day of the month that was specified as depreciation start date.

If no prorata is entered, a complete annuity will be retained for the acquisition fiscal year.

Duration

You must enter it, in years and hundredths of years.

Example: 6 years 2/3 = 6.66 or 6.67

For this depreciation method, Sage X3 will round to 2 decimals all the durations entered or imported with more than 2 decimals. The same applies for residual durations calculated in the framework of intra-group sales.

Rate

The applicable rate for the calculation of the declining depreciation is obtained by multiplying the straight-line depreciation rate corresponding to the standard use duration of the fixed asset by a declining factor that you specify: It must be greater than 1 and less than or equal to 2.

Declining depreciation rate = 1 / duration * declining factor

It is important to note that:

  • The entered declining factor must have up to 2 decimals.
  • The calculated depreciation rate is rounded to 2 decimals.
  • The user is free to determine the declining depreciation rate they want to apply: you can thus force the rate. It can be forced for a year and calculated for the others. If it is forced, it must be greater than the straight-line rate but not greater than twice the linear rate.

Depreciation end date

The depreciation end date depends on the Prorata temporis in months or the Prorata temporis in days option, specified at the method setup level.

If the prorata temporis is expressed in months:

Depreciation end date = first day of the month of the depreciation start date + depreciation duration in months.

This makes the depreciation end date correspond to the last day of a month.

Example 1:

  • Depreciation start date: 14/07/2005
  • Duration: 5 years
  • Depreciation end date: 30/06/2010

Example 2:

  • Depreciation start date: 05/02/2005
  • Duration: 6.66 years
  • Depreciation end date: 30/09/2011

If the prorata temporis is expressed in days:

Depreciation end date = depreciation start date + depreciation duration

This leads to a depreciation end set at the end of a week.

Example 3:

  • Depreciation start date: 14/07/2005
  • Duration: 5 years
  • Depreciation end date: 13/07/2010

If no prorata is applied:

Depreciation end date = first day of the acquisition fiscal year + depreciation duration

This makes the depreciation end correspond to the last day of a month.

Example 4:

  • Depreciation start date: 03/02/2005
  • Duration: 5 years
  • Depreciation end date: 31/12/2009

Depreciation charges

The depreciation charge of the first fiscal year is equal to:

Depreciable value * declining factor * prorata temporis expressed in months or in days

A Prorata temporis, in months or in days, is applied when the option is specified at the depreciation method level and for a fiscal year whose duration differs from 12 months.

The number of holding months will be different from 12 in the following situations:

  • The Depreciation start date is beyond the fiscal year start date.
  • The fiscal year Duration differs from 12 months.
  • The Disposal date of the asset is in the interval [Fiscal year start date – Fiscal year end date].

The charge of the next fiscal years (1) is equal to:

Net depreciable value at fiscal year start * declining factor * prorata temporis expressed in months or in days

A Prorata temporis, in months or in days, is applied when the option is specified at the depreciation method level and for a fiscal year whose duration differs from 12 months.

The number of holding months will be different from 12 in the following situations:

  • The fiscal year Duration differs from 12 months.
  • The Disposal date of the asset is in the interval [Fiscal year start date – Fiscal year end date].

The calculation above is replaced with: Depreciable value * straight-line rate

If the amount obtained is larger than: Net depreciable value at fiscal year start * declining factor

A Prorata temporis, in months or in days, is applied to the value retained when the option is specified at the depreciation method level and for a fiscal year whose duration differs from 12 months.

The number of holding months will be different from 12 in the following situations:

  • The fiscal year Duration differs from 12 months.
  • The Disposal date of the asset is in the interval [Fiscal year start date – Fiscal year end date].

(1) A declining annuity must not exceed 40% of the Gross value of the asset: if the application of the rate results in this overrun, the fiscal year charge is limited to this upper limit.

Depreciable value = Gross value – Residual value Net depreciable value = Net value – Residual value

Distribution of the fiscal year charge on the periods

If the fiscal year is divided into several periods, the fiscal year charge is distributed over these periods. This distribution is carried out based on the following algorithms:

Period Charge pc = Fiscal year charge * ( Σ p1 to pc ( (Period weight / Number of days or months in the period) * Number of holding days or months in the period ) / Σ p1 to pc ( (Period weight / Number of days or months in the period) * Number of holding days or months in the period ) ) - Depreciation total of previous periods

p1 to pc = from the first holding period in the fiscal year to the current period included (1)

p1 to pf = from the first holding period in the fiscal year to the last holding period in the fiscal year

(1) Unless the asset is issued in the fiscal year before this current period or if it is completely depreciated in the fiscal year before this current period. The period retained is thus the minimum period among:

  • The period of depreciation end if the Depreciation end date belongs to the interval [period start – period end]
  • The disposal period if the Disposal date belongs to the interval [period start – period end]
  • The current period

Prorata temporis

Time is expressed in months.

When the choice of applying a prorata temporis is specified in the Prorata temporis in months option, available at the method setup level:

  • A prorata temporis will be applied to determine the charge of the first fiscal year in the case where the depreciation origin is not the first day of the fiscal year, or in the case where the fiscal year duration differs from 12 months.
  • A prorata temporis will be applied to determine the charge of the disinvestment fiscal year: the charge is calculated until the end of the month that precedes the disposal (if the disposal date is not the end of a month and the prorata is determined in months) or until the disposal date if it corresponds to the end of a month or if the prorata temporis is determined in days. This rule can be modified by Disposal rules: No depreciation charge on the disposal day, Disposal at the end of the previous FY and Disposal at the end of the current FY.

In case where the company has not specified a prorata temporis:

  • The charge of the first fiscal year will be equal to a complete annuity.
  • No charge will be calculated for the disinvestment fiscal year. This rule can be affected by the Disposal rule: Disposal at the end of the current FY.

Whether the application of a prorata temporis is specified or not:

A prorata temporis will be applied to determine the charge of a fiscal year whose duration differs from 12 months.