Folks often have questions about the difference between Amortization and Straight Line Depreciation in the GP Fixed Assets module. This is how the various calculations work:
|Daily||Amortization Amount * 365 (or 366 if leap year)|
|Weekly||Amortization Amount * 52|
|Monthly||Amortization Amount * 12|
|Quarterly||Amortization Amount * 4|
|Yearly||Yearly Depreciation Amount = Amortization Amount|
|Percentage||(Cost Basis - (LTD Depreciation - YTD Depreciation)) * Percentage|
|Rate||(Cost Basis - Salvage Value - Special Depreciation Allowance) * Rate|
For Straight Line:
|Straight-line Orig Life||(Cost - Salvage Value - Special Depreciation Allowance) ÷ Original Life in Years|
If the Original Life includes days, the days will be converted to a fraction with days as the numerator and 365 as the denominator. For example, if the number of days is 146, the fraction would be displayed as 146/365.
|Straight-line Rem Life||(Cost - Salvage Value - (LTD Depreciation Amount - YTD Depreciation Amount)) ÷ Remaining Life in Days|
This calculation determines the daily depreciation rate, which must be multiplied by the number of days in the year.
This method is used when you select the Switch to Straight-Line option.
Since Amortization doesn't consider the life of the asset, only the cost, users need to calculate the life of an asset when using amortization, unlike depreciation.
[H.T. to Xen Osorio who clarified this beyond the help documents in a Partner newsgroup post.]
Originally Posted by Mark Polino at 3/01/2010 09:00:00 AM