Polish 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 Polish legislation.

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

ML - Polish linear

This depreciation method is used in Poland.

Note - warningWhen the acquisition date of the asset is prior to the current fiscal year, you cannot recalculate the depreciation total of the previous closed fiscal years. You must always specify the depreciation total by entry (or import) during the asset creation.

Depreciation origin

It is equal to the first day of the next month specified in the depreciation start date, except when the depreciation start date corresponds to the first day of a month. In that case, the depreciation starts to that date.

Example:

Depreciation start date

Start point

01/01/2010

01/01/2010

15/01/2010

01/02/2010

Duration

You can enter the duration.

It must be specified in years and year thousandths, or in number of month, using the right-click option.

Example: 6,666 or 6,667 for a duration of 6 years 2/3.

The entered duration must correspond to an integer number of months. Otherwise, the decimal part of the duration is corrected according to the table below.

Note - informationThe Duration in months right-click option, available in the Duration field, allows you to enter the duration directly in months. This duration is then automatically converted into years and year thousandths.

Month

Start range

End range

Correction

0

0

0.041

0

1

0.042

0.125

0.083

2

0.126

0.208

0.167

3

0.209

0.291

0.25

4

0.292

0.375

0.333

5

0.376

0.458

0.417

6

0.459

0.541

0.50

7

0.542

0.625

0.583

8

0.626

0.708

0.667

9

0.709

0.791

0.75

10

0.792

0.875

0.833

11

0.876

0.958

0.917

12

0.959

1.041

1

Note - warningYou can also enter the rate. In this case, the rate takes priority over the entered duration.

Rate

You can enter the depreciation rate as a coefficient with a 6-decimal precision.

Example: 0.333333

You can enter the rate, the duration, or both. When entered, the rate is forced and takes priority over the duration.

When the duration is entered only, the rate is determined based on the duration, as follows: (1 / duration in months) * acceleration factor

The displayed rate corresponds to the rate thus calculated, rounded to the 6th decimal digit.

The non-rounded rate is the one used for the calculation.

When the rate is forced, the duration (calculated as follows: 1 / rate) is not displayed.

You can enter this acceleration coefficient, which is a part of the depreciation rate calculation, or define it by associations, especially if this mode is also defined by associations. It can be modified by the Method change action.

When its value is greater than 1, this coefficient increases the depreciation rate.

When its value is less than 1, this coefficient decreases the depreciation rate.

Depreciation end date

It is determined in four steps:

Step 1: Calculation of the annual reference depreciation charge

Depreciation basis * Depreciation rate * Acceleration coefficient

Step 2: Calculation of the monthly reference depreciation charge

Reference annual depreciation charge / Number of reference months

  • There are 12 reference months if no seasonality is applied, or if a seasonality of type Decreasing is applied.
  • The number of reference months corresponds to the number of periods, defined as active in the seasonality plan for an Increasing type seasonality.
Note - informationRefer to the Special features section below for more information on the seasonality plan.

Step 3: Calculating the number of active months remaining for depreciation

Net value of current period start (1) / Monthly reference depreciation charge.

If the result contains decimal digits, depending on the value taken by the MINPERDEP - Minimum period depreciation charge parameter (AAS chapter, CLC group) that defaults to the 0.50 value, it will be rounded as follows:

  • If the decimal part leads to calculating a charge amount superior to the parameter value, a month will be added to the result.
  • Otherwise, the number of active months remaining for depreciation corresponds to the result.

Step 4: Depreciation end date calculation

Current period start date (1) + number of active months remaining for depreciation (2)

The depreciation end date must always correspond to the last day of a month.

(1) In the case of retroactive modernization, the net value at the beginning of the modernization period and the start date of this modernization period are considered.

(2) Inactive months are not considered in this calculation.

Prorata temporis

In most cases, 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 duration differs from 1 year.
  • During the fiscal year in which a modernization occurs.
  • During the disinvestment fiscal year. The charge is calculated until the end of the month during which the disposal occurs.
Note - informationA fiscal year must always correspond to a calendar year and be broken down into 12 periods of 1 month.

Special features

Seasonality

This principle is based on the definition of annual seasonality plans with months declared as active or inactive.

The reference of a seasonality plan must be specified for each asset the seasonality applies to.

No depreciation is calculated for an inactive month.

The depreciation calculated for an active month depends on the defined seasonality type:

  • Seasonality type: Increasing. The fiscal year depreciation charge is distributed over the active months.
  • Seasonality type: Decreasing. The fiscal year depreciation charge corresponds to the total of charges of each active month. The monthly depreciation charge corresponds to 1/12th of the fiscal year charge. The fiscal year depreciation charge is thus calculated and decreased.

Modernization

An accounting asset can be subject to a modernization, by using the right-click option on the Depreciation table of the management function of Accounting assets, for the current period only. A modernization process modifies the depreciation basis on the fiscal and/or accounting plan. As a consequence, the results of the calculation are modified.

On the fiscal plan, a modernization is considered from the first day of the next period.

On the accounting plan, the modernization is considered from the first day of the next period, except when the MDRCURPER - Current period modernization folder parameter (AAS chapter, CLC group) is set to Yes. In this case, the effective modernization date corresponds to the first day of the current period.

Depreciation charges

The FY charge is equal to:

Annual reference depreciation charge * Number of active months for depreciation (1) / Number of active months of the Fiscal year

The result is rounded to 2 decimal digits (for instance: 1.555 is rounded to 1.56 and 1.554 is rounded to 1.55).

On the last depreciation fiscal year, the fiscal year charge is equal to the net value of the period start.

(1) The number of active months for depreciation corresponds to the number of active months included in the following range:

[Max (Depreciation start date, Fiscal year start date, Modernization start date), Min (Fiscal year end date, disposal date)]

It is important to note that:

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

Distribution of the fiscal year charge on the periods

The fiscal year depreciation charge is distributed over the periods. This distribution is applied according to the following rule:

Period charge = Reference annual charge

* ( Σ p1 to pc (Number of active days for depreciation in the period)

/ Number of months in the fiscal year

- Depreciation totals of previous periods of the fiscal year (2)

p1 to pc = from the first active period for depreciation in the fiscal year (1), to the current period included.

(1) The first active period for depreciation corresponds to the next period having the greater date:

  • The depreciation start date
  • The fiscal year start date
  • The modernization date

(2) In case of modernization, the depreciation total of previous periods is reduced by the depreciation total before modernization.

The depreciation of the last period equals the net value.

Note - informationFor this depreciation method, the period weight is not considered.

MD - Polish declining

This depreciation method is used in Poland.

Note - warningWhen the acquisition date of the asset is prior to the current fiscal year, you cannot recalculate the depreciation total of the previous closed fiscal years. The depreciation total must always be specified by entry or import during the asset creation.

Depreciation origin

It is equal to the first day of the next month specified in the depreciation start date, except when the depreciation start date corresponds to the first day of a month. In that case the depreciation starts at that date.

Example:

Depreciation start date

Start point

01/01/2010

01/01/2010

15/01/2010

01/02/2010

Duration

You can enter the duration.

It must be specified in years and year thousandths, or in number of months, by using the right-click option.

Example: 6,666 or 6,667 for a duration of 6 years 2/3.

The entered duration must correspond to an integer number of months. Otherwise, the decimal part of the duration is corrected according to the table below.

The Duration in months right-click option, available in the Duration field, allows you to enter the duration directly in months. This duration is then automatically converted into years and year thousandths.

Month

Start range

End range

Correction

0

0

0.041

0

1

0.042

0.125

0.083

2

0.126

0.208

0.167

3

0.209

0.291

0.25

4

0.292

0.375

0.333

5

0.376

0.458

0.417

6

0.459

0.541

0.50

7

0.542

0.625

0.583

8

0.626

0.708

0.667

9

0.709

0.791

0.75

10

0.792

0.875

0.833

11

0.876

0.958

0.917

12

0.959

1.041

1

Note - warningYou can also enter the rate. In this case, the rate takes priority over the entered duration.

Rate

You can enter the depreciation rate in the form of a coefficient with a 6-decimal precision.

Example: 0.333333

You can enter either the rate, the duration, or both. When entered, the rate is forced and comes before the duration.

  • When the duration is entered only, the rate is determined based on the duration, as follows: (1 / duration in months) * acceleration factor. The displayed rate corresponds to the rate thus calculated, rounded to the 6th decimal digit. The non-rounded rate is the rate used for the calculation.
  • When the rate is forced, the duration (calculated as follows: 1 / rate) is not displayed.

You can enter this acceleration coefficient, which is a part of the depreciation rate calculation, or define it by associations, especially if this mode is also defined by associations. It can be modified by the Method change action.

When its value is greater than 1, this coefficient increases the depreciation.

When its value is less than 1, this coefficient decreases the depreciation.

Depreciation end date

It is never determined.

Prorata temporis

In most cases, 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, as illustrated in the example below.
  • During the fiscal year in which a modernization occurs. The new net value obtained after the modernization action allows you to calculate the new complete annual depreciation charge prorated, according to the number of months between the modernization period and the fiscal year end. This amount is added to the depreciation total of previous periods of the fiscal year to determine the amount of the annual depreciation charge.
  • During the disinvestment fiscal year. The charge is calculated until the end of the month during which the disposal occurs.
Note - informationA fiscal year must always correspond to a calendar year and be broken down into 12 periods of 1 month.

Example:

  • Gross value: 9,500.00

Linear

  • Depreciation rate: 0.25 (Duration: 4 years)
  • Annual depreciation charge: 2,375.00
  • Monthly periodic depreciation charge: 197.92
  • Acceleration coefficient: 3

Declining

  • Depreciation rate: 0.75 (duration: 1.333333333)
  • Annual depreciation charge: 7,125.00
  • Monthly periodic depreciation charge: 593.75
  • The depreciation start date being equal to March 1st, the annual charge is prorated on the first fiscal year: 7,125.00 * 10 / 12 = 5,937.50

Special features

Seasonality

This principle is based on the definition of annual seasonality plans with months declared as active or inactive.

The reference of a seasonality plan must be specified for each asset the seasonality applies to.

It is possible for each depreciation plan, based on the MD mode, to specify if the seasonality should or should not be applied.

No depreciation is calculated for an inactive month.

The depreciation calculated for an active month depends on the defined seasonality type:

  • Seasonality type: Increasing. The fiscal year depreciation charge is distributed over the active months.
  • Seasonality type: Decreasing. The fiscal year depreciation charge corresponds to the total of charges of each active month. The monthly depreciation charge corresponds to 1/12th of the fiscal year charge. The fiscal year depreciation charge is thus calculated and decreased.

Modernization

A financial asset can be subject to a modernization, by using the right-click option on the Depreciation table of the management function of Financial assets, for the current period. The modernization action is always carried out on the current period but its implementation date may be located on a closed period of the current fiscal year. In that case, the modernization is retroactive.

It can also be located on the current period, on the next period or on the first period of the next financial year, according to the depreciation plan concerned (accounting or fiscal), to the value of the MDRCURPER - Current period Modernization parameter (AAS chapter, CLC group), and to the fiscal year during which the modernization occurred. The different cases are specified in the tables below.

A modernization process modifies the depreciation basis on the fiscal and/or accounting plan. As a consequence, the results of the calculation are modified.

The implementation is always on the first day of a month.

If needed, you can choose between next period of the current fiscal year and first period of the following fiscal year (1).

You can only account for the impact of modernization on the depreciation plan after closing the period previous to the one during which the modernization occurred. As long as a modernization is in progress, no business action, such as a change of method, depreciation or revaluation, is authorized.

You cannot perform 2 modernizations with identical implementation dates but different periods. In that case, it will be necessary to cancel the first modernization before performing the second one.

If you need to perform a retroactive modernization, it must be superior to the last business action performed. It will be effective in the current period.

Depreciation charges

The fiscal charge is equal to:

Net depreciation value * Rate * Acceleration coefficient

Number of active months for depreciation (1) / Number of active months of the fiscal year

The result is rounded to 2 decimal digits. For instance, 1.555 is rounded to 1.56 and 1.554 is rounded to 1.55.

On the last depreciation fiscal year, the fiscal year charge will be equal to the net value of the period start.

(1) The number of active months for depreciation corresponds to the number of active months included in the following range:

[Max (Depreciation start date, Fiscal year start date, Modernization start date), Min (Fiscal year end date, disposal date)]

It is important to note that:

  • Net depreciable value = Net value – Residual value

Distribution of the fiscal year charge on the periods

The fiscal year depreciation charge is distributed over the periods. This distribution is applied according to the following rule:

Period charge = Reference annual charge * ( Σ p1 to pc (Number of active days for depreciation in the period) / Number of months in the fiscal year - Depreciation totals of previous periods of the fiscal year (2)

p1 to pc = from the first active period for depreciation in the fiscal year (1), to the current period included

(1) The first active period for depreciation corresponds to the next period having the greater date:

  • The depreciation start date
  • The fiscal year start date
  • The modernization date

(2) In case of modernization, the fiscal year depreciation total of periods previous to the modernization is reduced to the depreciation total before the current period.

The depreciation of the last period equals the net value.

Note - informationFor this depreciation method, the period weight is not considered.