French standard depreciation method description

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

Standard includes 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 French legislation.

• LP - French straight-line
• DF - French declining
• FM - Forms and molds
• LG - Laundry
• LV - Straight-line beyond null salvage unit
• CA- Amortization expense/gross value
• RA - Amortization expense/net value

LP - French straight-line

• Depreciation origin
• Duration
• Rate
• Depreciation end date
• Prorata temporis
• Specific rules
• Depreciation charges
• Distribution of the fiscal year charge on the periods

It is the straight-line depreciation method applied according to French rules.

Depreciation origin

The depreciation is calculated from the day of first use of each depreciable element onwards. The day specified as depreciation start date is retained.

Duration

You can specify the duration or the rate.

If you specify the duration, the depreciation rate and the depreciation end date based on this duration are automatically determined. 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, for example 6.67 for a duration of 6 years and 2/3. 

Rate

When you specify the rate, the depreciation duration based on the rate entered is automatically determined, which is used to calculate the depreciation end date.

When the depreciation rate is not specified, the rate is determined as follows: 1/duration.

Depreciation end date

The end date depends on whether the Specific rule is applied or not: 1st fiscal year counted for 1 year.

You can set this rule, specified at asset depreciation schedule level, or it can come from the application of section associations.

• If this rule is not applied, the end date is equal to:
  depreciation launch day + depreciation duration.
• When this rule is applied, the depreciation end date is calculated as if the asset were depreciated with French declining method.

Examples made without application of the rule: 1st fiscal year counted for 1 year.

Prorata temporis

The prorata temporis is expressed in days. It is applied in the following situations:

• During the acquisition fiscal year, if the depreciation start date is not the first day of the fiscal year.
• If the fiscal year duration differs from 1 year.
• During a fiscal year to which several depreciation rates are applied.
• During the disinvestment fiscal year: the charge is calculated until disposal day. This rule can be modified by the disposal rules: Disposal at the end of the previous FY, Disposal at the end of the current FY, and No depreciation charge on the disposal day.

Specific rules

For this depreciation method, 2 specific rules are available:

1st fiscal year counted for 1 year

This rule affects the determination of the Depreciation end date.

Software, 12 months

This rule, which is authorized only for this depreciation method, can be used for accelerated software depreciation over 12 months.

You can select it or it can be determined by the section associations.

• The depreciation origin is necessarily the 1st day of the month entered in the depreciation start date.
• The duration, which is 1 year, cannot be modified.
• The depreciation rate, which is automatically 100%, cannot be modified.
• The depreciation end date is equal to 1st day of the month of the depreciation start date + 12 months.
• The prorata temporis is applied in months. It is applied in the following situations:
  • During the acquisition fiscal year, if the depreciation start date is not the first day of the fiscal year.
  • During a fiscal year to which several depreciation rates are applied.
  • During the disinvestment fiscal year: the charge is calculated until the disposal date. Otherwise, the charge is calculated until the end of the previous month. This rule can be modified by Disposal rules: Disposal at the end of the previous FY and Disposal at the end of the current FY.

• The depreciation charge for the fiscal year is equal to: Depecriable value * Depreciation rate * prorata in months

• The distribution of the fiscal year charge over the periods is carried out according to the following rule:

  Period Charge (pc) = Fiscal year charge *

  [ S p1 to pc ( (Period weight / Number of months in the period) * Number of holding months in the period )

  /

  S p1 to pf ( (Period weight / Number of months in the period) * Number of holding months in the period ) ]
  -
  Depreciation total of previous periods

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

  p1 to pf = from the 1st 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 minimum period retained from one of the following:

  • Period of depreciation end if the Depreciation end date belongs to the interval [period start – period end]
  • Disposal period if the Disposal date belongs to the interval [period start – period end]
  • Current period

Depreciation charges

The fiscal year charge is equal to:
Depreciable value * Depreciation rate * prorata temporis in days

Notes:

Depreciable value = (Gross value – Residual value)

Gross value = Depreciation basis

The value of the depreciation rate used depends on the RNDCHGLPDF - LP/DF rounding change parameter (AAS chapter, CLC group). If it is set to No, the rate is rounded to 4 decimals. If it is set to Yes, the rate is determined without any rounding.

If the Priority to the rate is not selected in the Depreciation method setup, the depreciation end date has priority over the rate. In this case, if the depreciation end date is in the calculated period or fiscal year, the depreciation is closed. 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 applied according to the following rule:

Period Charge (pc) = Fiscal year charge *

[ S p1 to pc ( (Period weight / Number of days in the period) * Number of holding days in the period )

/

S p1 to pf ( (Period weight / Number of days in the period) * Number of holding days in the period ) ]

-

Depreciation total of previous periods

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

p1 to pf = from the 1st 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 minimum period retained from one of the following:

• Period of depreciation end if the Depreciation end date belongs to the interval [period start – period end]
• Disposal period if the Disposal date belongs to the interval [period start – period end]
  
• Current period

DF - French declining

• Depreciation origin
• Duration
• Rate
• Depreciation end date
• Prorata temporis
• Depreciation charges
• Distribution of the fiscal year charge on the periods

Depreciation origin

The declining depreciation origin extends from the first day of the acquisition month or from the creation of the element subject to this rule.

Duration

The duration needs to be at least 3 years, by years and hundredths of years.

For example: 6 2/3 years = 6,66 or 6,67.

Rate

The applicable rate for declining depreciation calculation is obtained by multiplying the straight-line depreciation rate corresponding to the standard use duration of the fixed asset by a coefficient that varies based on this duration.

This variable coefficient is called declining factor and can vary.

Depending on depreciation duration:

• Duration = 3 years and < 5 years
• Duration = 5 years and = 6 years
• Duration > 6 years

Depending on the year of acquisition of the fixed asset:

• Acquired before 01/01/2001
• Acquired from 01/01/2001 onward
• Acquired during the period [01/02/1996 – 31/12/1997]
• Acquired during the period [04/12/2008 – 31/12/2009]

Grid of declining factors and depreciation rates applied to assets in general, according to the depreciation duration and the acquisition date.

It also varies depending on certain financial aid (LM 3168 - Specific depreciation rules) allocated according to the destination of the assets. A financial aid is applied at the request of the user, by selecting a Specific rule. The application of a Specific rule corresponding to a financial aide is authorized only on the fiscal plan.

This various financial aid constitutes an accelerated depreciation, integrated to the normal charge: the part of the charge that corresponds to the depreciation increase is not isolated from the normal charge.

Accelerated declining depreciation for the materials destined for energy saving and equipment of renewable energy production acquired or produced between 01/01/2001 and 01/01/2003: for these assets, the applicable declining factors are 2, 2.5 and 3. See table E below (1).

Accelerated declining depreciation for the materials and tools used for scientific and technical research acquired or produced from 01/01/2004 onwards: for these assets, the applicable digressivity factors are 1.5, 2 et 2.5. See table F below (1).

1-point increase of the factor for certain assets (depreciable over a duration of 8 years) made available to a company which uses them as part of its normal activity.

30% increase of the depreciation carried out over the first 12 months following the acquisition; this measure is specific to investments performed between 17/10/2001 and 31/03/2002.

30% increase of the declining rate in use on the closing date of each fiscal years for which the measure specific to wood-processing companies is applied. This measure applies to the assets acquired within the following date range:
*26/09/2008 - 31/12/2011
*13/11/2013 - 31/12/2016 

40% deduction on the acquisition amount. This measure applies to the depreciable assets of a company subject to the French legislation acquired within the following date range:
* 15/04/2015 - 14/04/2016

This deduction of a prorata on the acquisition year and on the depreciation end year). Unlike other financial helps, the deduction is not integrated into the normal charge. It is a non-accounting financial aid that is not taken into account. It appears in the column Financial Help at the depreciation plan level. 

To view the comprehensive framework of how the deduction is applied, see the official text: BOI-BIC-BASE-100-20150421.

(1) Grid of declining factors and depreciation rates applied to materials destined for energy saving and to materials and tools used for scientific and technical research:

Depreciation end date

It is determined as follows:

Next fiscal year start date (1) + Number of years remaining for depreciation with:

Number of years remaining for depreciation =
( Depreciation duration – Period duration [Acquisition fiscal year start date – Current fiscal year end date] )

To perform this calculation, the depreciation duration and the due period duration are calculated in months and then converted into years. If this result does not correspond to a round number of years, the higher rounded number of years is retained.

(1) The next fiscal year relative to the current fiscal year of the depreciation context, for the assets that are acquired during the current fiscal year or that precede this fiscal year.

The fiscal year that follows the acquisition fiscal year, for the assets that follow the current fiscal year.

Prorata temporis

Time is expressed in months. A prorata temporis applies in the following cases:

•  During the acquisition fiscal year, if the depreciation origin is not the first day of the fiscal year.
  If the fiscal year start date is not the first day of the month, taking into account the applicable prorata temporis in months, the 1st day of the month as fiscal year start date is retained.
• If the duration of a fiscal year differs from 12 months.

• During the disinvestment fiscal year: the charge is calculated until the end of the month preceding the asset disposal month, or up to the end of the asset disposal month if this date corresponds to the last day of a month.
  This rule can be modified by Disposal rules: Disposal at the end of the previous FY and Disposal at the end of the current FY.

Depreciation charges

The depreciation charge of the 1st fiscal year is equal to

• Depreciable value * rate * prorata temporis (number of holding months / 12)
  

A prorata temporis in months is applied in the following cases:

• The depreciation start date is after the fiscal year start date
  
• The fiscal year duration differs from 12 months
  
• The disposal date of the asset is within the [Fiscal year start date – Fiscal year end date]
  

The depreciation charge of the next fiscal years is equal to:

• Net depreciable value of fiscal year start * rate * prorata temporis (number of holding months / 12)
  

A prorata temporis is applied in the following cases:

• The fiscal year duration differs from 12 months
  
• The disposal date of the asset is within the [Fiscal year start date – Fiscal year end date] 
  

The calculation above is replaced with:

If the amount obtained is larger than: Net depreciable value at fiscal year start * rate, the Net depreciable value at fiscal year start / Residual depreciation duration a fiscal year start.

If the Net depreciable value at fiscal year start / Residual depreciation duration at fiscal year start, a prorata temporis is applied in the following cases:

• 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 the depreciation end date is earlier than the fiscal year start date, the fiscal year charge will automatically be loaded with the net depreciable value, so as to close the depreciation.

Notes:

Depreciable value = Gross value – Residual value

Net depreciable value = Net value – Residual value

Residual duration = Number of whole years in the period [Fiscal year stat date – Depreciation end date]

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 months in the period) * Number of holding months in the period )

/

Σ p1 to pf ( (Period weight / Number of months in the period) * Number of holding months in the period ) )

-

Depreciation total of previous periods 

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

p1 to pf = from the 1st 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 minimum period retained is one of the following:

• Period of depreciation end if the depreciation end date belongs to the interval [period start – period end] 
  
• Disposal period if the disposal date falls within the [period start – period end]
  
• Current period

FM - Forms and molds

• Depreciation origin
• Duration
• Rate
• Depreciation end date
• Prorata temporis
• Depreciation charges
• Distribution of the fiscal year charge on the periods

This is a depreciation method specific to French accountability and tax system.
It can be applied to manufacturing forms and molds.

Depreciation origin

It is automatically equal to the 1st day of the month specified as depreciation start date.

Duration

The duration is automatically equal to 3 years.

Rate

The rate is calculated automatically and cannot be modified.

The rate changes over time:

• 50% in the first 12 months 
• 30% in the next 12 months
• 20% in the last 12 months

Depreciation end date

It is determined automatically and is equal to:

1st day of the month entered as the depreciation start date + 3 years

Example

Prorata temporis

The prorata temporis is systematically expressed in months. It is applied in the following situations:

• During the acquisition fiscal year, if the depreciation start date is not the first day of the fiscal year.
• If the fiscal year duration differs from 1 year.
• During a fiscal year to which several depreciation rates are applied.
• During the disinvestment fiscal year: the charge is calculated until the disposal day if the day of the disposal date is the last of the month; otherwise, the charge is calculated until the end of the month that precedes the disposal.
  
• This rule can be modified by disposal rules: Disposal at the end of the previous FY and Disposal at the end of the current FY.

Depreciation charges

The fiscal year charge is equal to: Depreciation charge at 50% + Depreciation charge at 30% + Depreciation charge at 20%.

If the depreciation end date is earlier than or equal to the fiscal year end date, the fiscal year charge will automatically be loaded with the net depreciable value 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. This distribution is applied according to the following rule:

Period Charge (pc) = 

Fiscal year charge *

[ S p1 to pc ( (Period weight / Number of months in the period) * Number of holding months in the period )

/

[ S p1 to pf ( (Period weight / Number of months in the period) * Number of holding months in the period )

-

Depreciation total of previous periods

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

p1 to pf = from the 1st 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 minimum period is retained from one of the following:

• Period of depreciation end if the depreciation end date is within the [period start – period end] 
• Disposal period if the Disposal date is within the [period start – period end]
  
• Current period

LG - Laundry

This typically French depreciation method is specific to washable items used in a professional and/or industrial context, such as towels.

Depreciation origin

It is automatically equal to the 1st day of the month specified as the depreciation start date.

Duration

The duration automatically equals 18 months (1.5 years).

Rate

The rate automatically determined and cannot be changed.

The rate changes over time:

• 40% during the 1st month 
• 12% during the 2nd month
• 3% per month, from the 3rd to the 18th month

Depreciation end date

It is automatically determined and is equal to the 1st day of the month entered as the depreciation start date + 18 months.

For example:

Prorata temporis

The prorata temporis is automatically expressed in months. It is applied in the following situations:

• During the acquisition fiscal year, if the depreciation start date is not the first day of the fiscal year.
• If the fiscal year duration differs from 1 year.
• During a fiscal year to which several depreciation rates are applied.
• During the disinvestment fiscal year: the charge is calculated until the disposal day if the day of the disposal date is the last of the month; otherwise, the charge is calculated until the end of the month that precedes the disposal.
  

This rule can be modified by disposal rules: Disposal at the end of the previous FY and Disposal at the end of the current FY.

Depreciation charges

The fiscal year charge is equal to the depreciation charge at 40% + depreciation charge at 12% + depreciation charge at 3%.

If the depreciation end date is earlier than or equal to the fiscal year end date, the fiscal year charge will automatically be loaded with the net depreciable value, so as 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. This distribution is applied according to the following rule:

Period Charge (pc) = 

Fiscal year charge *

[ S p1 to pc ( (Period weight / Number of months in the period) * Number of holding months in the period )

/

[ S p1 to pf ( (Period weight / Number of months in the period) * Number of holding months in the period )

-

Depreciation total of previous periods

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

p1 to pf = from the 1st 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 minimum period retained from of the following:

• Period of depreciation end if the depreciation end date is within the [period start – period end] 
  
• Disposal period if the disposal date is within the [period start – period end]
  
• Current period

LV- Straight-line beyond null salvage unit

• Depreciation origin
• Duration
• Rate
• Depreciation end date
• Prorata temporis
• Depreciation charges

Depreciation origin

The depreciation is calculated from the start date.

Duration

The duration cannot be entered, because this is a perpetual depreciation.

Rate

The depreciation rate must be entered by entry or via section associations.

Depreciation end date

The end date is not determined because this method is a perpetual depreciation.

Prorata temporis

The prorata temporis is systematically expressed in days. It is applied in the following situations:

• During the acquisition fiscal year, if the depreciation start date is not the first day of the fiscal year.
• If the fiscal year duration differs from 1 year.
• During a fiscal year to which several depreciation rates are applied.
• During the disinvestment fiscal year: The charge is calculated until disposal day.
  

This rule can be modified by disposal rules: Disposal at the end of the previous FY, Disposal at the end of the current FY, and No depreciation charge on the disposal day.

Depreciation charges

The fiscal year charge is equal to:

Gross value * Depreciation rate * prorata temporis in days

Notes

Gross value = Depreciation basis

Although the depreciation must go on beyond the null net value, the net value is never negative, but limited to 0.

CA - Amortization expense/gross value

• Depreciation origin
• Duration
• Rate
• Depreciation end date
• Prorata temporis
• Specific rules
• Depreciation basis
• Depreciation charges
• Distribution of the fiscal year charge on the periods
• Method change

This depreciation method can only be applied:

• To an asset whose Holding type is In concession
• To a plan attached to the Accounting and fiscal depreciation context, except for the Grant schedule.

It can be used to limit the depreciation duration according to the concession end date. When the concession is completed, the grantee will have to give the asset back to the licensor. The depreciation cannot be extended beyond this date.

This method also used its depreciation basis the asset value (its cost price) minus the amount of allocated subsidy. This means that entering a Residual value is prohibited.

 The following actions are not available for a plan depreciated according to this method:

• Impairment
  
• Revaluation

Depreciation origin

The depreciation starts on the day specified as depreciation start date.

Duration

You can specify the duration in years and hundredths of years. By default, it is determined as follows: Concession end date - Depreciation start date. 

For example:

• Concession end date: 31/12/10
  
• Depreciation start date: 7/1/2006
  
• The calculated depreciation duration will be:  31/12/2010 – 01/07/2006 = 1,645 days / 365 = 4,51 years

The depreciation duration specified by the user is not necessarily the one that will be applied. This duration leads to a Depreciation end date that is later than the Concession end date, the depreciation duration applied will be calculated as described above.

For example: 

• Duration specified by the user: 10 years
  
• Depreciation start date: 7/1/2006
  
• Concession end date: 31/12/10
  
• The applied depreciation duration will be: 31/12/2010 – 01/07/2006 = 4,51 years

The depreciation duration you enter is stored. If the concession is extended, the entered duration can be applied, as long as it does not lead to a Depreciation end date that is later than the Concession end date.

In the example above, if the concession is extended to 31/12/2020, the duration applied will be the one you entered (10 years), because it no longer leads to a depreciation end date set later than the concession end date: 01/07/2006 + 10 years = 30/06/2016, which is earlier than 31/12/2020.

Rate

The rate cannot be entered. It is determined automatically depending on the duration, as follows: 1 / duration applied (see above) rounded to 4 decimals.

Depreciation end date

The depreciation end date is automatically calculated as follows:

• Equal to the Depreciation start date + Duration that you entered
• Equal to the Concession end date

See the indications given on the Depreciation duration.

Prorata temporis

The applied prorata temportis is always expressed in days in the following situations:

• During the acquisition fiscal year, if the depreciation start date is not the first day of the fiscal year.
• If the fiscal year duration differs from 1 year.
• During the disinvestment fiscal year so as to stop the depreciation on disposal day, unless the disposal rule is 1st asset from the concession sold, for which no prorata temporis will be applied.
  

Disposal rule: 1st asset from the concession sold

• This rule is available only for an asset that meets the following condition:
  
• It has at least 1 plan depreciated according to the Amort./gross value mode with the specific rule Adjustment/Reintegration of depreciation.
  
• It has the effect of considering that the asset is has not been issued. This has 2 consequences: 
  • The disinvestment fiscal year charge is complete: no prorata temporis is applied
  • The depreciation continues in the fiscal years that follow the disinvestment fiscal year until:
     The depreciation end date
     The Amort. abandoned is set

Specific rules

For this depreciation method, 2 specific rules are available:

Adjustment/Reintegration of depreciation 

This rule can be specified either upon creation of the asset, or via the action Change method, provided one of the following conditions is met:

• The asset did not undergo a fiscal year closure, prior depreciations are not cumulative.
  
• If the specific rule is Amort. abandoned, the depreciation total of the previous year is different from 0.

Amort. abandoned:

This rule can be specified only via the action Change method and only if the following condition is met:

The specific rule is equal to Adjustment/Reintegration of depreciation and the depreciation total of the previous fiscal year is different from 0.

It is also possible to switch from the Adjustment/Reintegration of depreciation plan rule to No specific rule, as long as the asset has not undergone a fiscal year closure, and prior depreciations are not cumulative.

Depreciation basis

It is automatically determined according to the following the calculation:

(Receipt value ex-tax + invoiced VAT – collected VAT) – Balance sheet value of the Subsidy plan

 Note:

The Balance sheet value recorded for a plan depreciated according to the Amort./gross value mode is:

• Equal to the Depreciation basis specified above
• Automatically updated by the calculation to take into account any modification of at least one of the following values:
  
  • Receipt value ex-tax
    
  • Invoiced VAT 
    
  • Invoiced VAT
    
  • Balance sheet value of Subsidy plan

Depreciation charges

The calculation mode for the depreciation charges depends on whether one of the following rules is applied: Adjustment/Reintegration of depreciation and Amort. abandoned.

If the Adjustment/Reintegration of depreciation rule is applied, the calculation is carried out as follows:

Systematic recalculation of prior depreciation total E-1

Calculation of the fiscal year exceptional charge =

New prior depreciation total E-1

Old prior depreciation total E-1

Calculation of the fiscal year normal charge = Depreciation basis * Depreciation rate * Prorata temporis in days

If the specific rule Adjustment/Reintegration of depreciation is applied, the calculation is carried out as follows:

• Fiscal year exceptional charge = prior depreciations E-1 * - 1
  
• Fiscal year normal depreciation = 0

If no specific rule is applied, the calculation is carried out as follows: 

Calculation of the fiscal year normal charge =   Depreciation basis * Depreciation rate * Prorata temporis in days

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 applied according to the following rule:

Period Charge = 

Fiscal year charge

*

( Σ p1 to pc (Number of holding days in the period )

/

Σ p1 to pf (Number of holding days in the period ) )

-

Depreciation total of previous periods

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

p1 to pf = from the 1st 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 minimum period is retained from one of the following:

• Period of depreciation end if the Depreciation end date belongs to the interval [period start – period end] 
  
• Disposal period if the Disposal date belongs to the interval [period start – period end]
  
• Current period

Method change

If the specific rule is Adjustment/Reintegration of depreciation, the management of the depreciation total variance systematically and automatically takes the value: Non integration of the variance. This is taking into account the nature of this specific rule which consists in systematically recalculating the depreciation total of the prior fiscal year and in recording the variance as exceptional charge.

RA - Amorization expense / Net value

• Depreciation origin
• Duration
• Rate
• Depreciation end date
• Prorata temporis
• Depreciation basis
• Depreciation charges

This depreciation method can only be applied:

• To an asset whose Holding type is In concession, 
• To a plan attached to the Accounting and fiscal depreciation context, except for the Grant schedule.

It is automatically applied:

• When you change a plan initially depreciated based on the Amortization expense on gross value method with the No specific rule applied and a prior depreciation total (Fiscal year -1).
• When you change the Depreciation basis for a plan depreciated based on the Amortization expense on gross value method with the No specific rule applied and a prior depreciation total (Fiscal year -1).
• When you change the duration following an update of the Concession end date for a plan initially depreciated based on the Amortization on gross value with the No specific rule applied and a prior depreciation total (Fiscal year -1).

This method is used to limit the depreciation duration according to the concession end date. When the concession ends, the grantee will have to give the asset back to the licensor. The depreciation cannot be extended beyond this date.

This method can also be used for its depreciation basis the asset value (its cost price) minus the amount of allocated subsidy. This means that entering a Residual value is prohibited.

 The following actions are not available for a plan depreciated according to this method:

• Impairment
  
• Revaluation

Depreciation origin

The depreciation starts on the day specified as depreciation start date.

Duration

You can set the duration in years and hundredths of years. By default, it is determined as follows:

Concession end date - Depreciation start date. 

For example:

• Concession end date: 31/12/10
  
• Depreciation start date: 7/1/2006
  
• The calculated depreciation duration will be: 31/12/2010 – 01/07/2006 = 1,645 days / 365 = 4,51 years

The depreciation duration specified by the user is not necessarily the one that will be applied. In fact, if this duration leads to a Depreciation end date that is later than the Concession end date, the depreciation duration applied will be calculated as described above.

For example: 

• Duration specified by the user: 10 years
  
• Depreciation start date: 7/1/2006
  
• Concession end date: 31/12/10
  
• The applied depreciation duration will be: 31/12/2010 – 01/07/2006 = 4,51 years

The depreciation duration you enteris stored. If the concession is extended, this entered duration can be applied as long as it does not lead to a Depreciation end date that is later than the Concession end date.

In the example above, if the concession is extended to 31/12/2020, the duration applied will be the one you entered (10 years) because it no longer leads to a depreciation end date set later than the concession end date: 01/07/2006 + 10 years = 30/06/2016 thus earlier than 31/12/2020.

Rate

You cannot enter the rate.

Depreciation end date

It is automatically determined as one of the following:

• Equal to the Depreciation start date + Duration you entered
• Equal to the Concession end date

See the indications given on the Depreciation duration.

Prorata temporis

This depreciation method does not apply a prorata temporisbecause the depreciation charge is not determined by applying an annual rate to a depreciation basis.

Depreciation basis

It is automatically calculated as follows:

(Receipt value ex-tax + invoiced VAT – collected VAT) – Balance sheet value of the Subsidy plan

  The balance sheet value recorded for a plan depreciated according to the Amort./gross value mode is:

• Equal to the Depreciation basis specified above
• Automatically calculated to take into account any modification of at least one of the following values:
  
  • Receipt value ex-tax
    
  • Invoiced VAT
    
  • Balance sheet value of the Subsidy plan

Depreciation charges

There are two different secenarios.

1. When the asset is not issued:

The charge for the residual fiscal year = [Current period – Last period of the fiscal year] is determined as folllows:

Net value at period start

*

Number of holding days in the interval [pc – pf] 

/

Number of days in the interval [pc – Depreciation end date]

The charge of each period not closed is then calculated as follows:

Charge for the residual fiscal year

*

(S pc to pn (Number of holding days in the period)

/

S pc to pf (Number of holding days in the period) )

- S depreciations in the periods of the interval [pc – pn-1]    

( pc = Current period, pn = Calculated period, pf = last holding period of the fiscal year ) 

The complete fiscal year charge will be equal to = ( Depreciation total in closed periods + Charge for the residual fiscal year )

2. When the asset was issued in a period prior to the current period:

Recalculation of the charge in the period of the Disposal date (2): 

Net value at Disposal period start

*

(Number of holding days in the Disposal period

/

Number of days in the interval [Disposal period – Depreciation end date] ) 

(2) This recalculation is used to determine the recovery of depreciations posted by error.

Disposal fiscal year charge calculation = S period charge [fiscal year start – Disposal period]

Current period charge calculation = Disposal fiscal year charge - S Closed period charges