As part of the reform, the Japan government published a new 250% Declining Balance Depreciation Method which can be used on assets acquired on or after April 1, 2007. For this method, the rate applied for depreciation is an accelerated balance method which is 250% of the rates used under the straight line method or more commonly known as 250DB. The method comes with an added feature of a straight-line switch. As a result, a new Guarantee Rate Evaluation Method check box was introduced to the Depreciation Method window to support the new 250DB method. This option enables five new variables to be available in defining depreciation formulas within the window.
The rates provided under this method are the basic 250DB rates, the guarantee rates and revised rates. The 250% DB Depreciation methods, as specified by the Japan government, are seeded as JP-250DB XX depreciation methods in Oracle Assets with one depreciation method for each possible asset life year.
The following table describes the JP-250DB depreciation methods:
| Field Name | Value |
|---|---|
| Method | JP-250DB XX |
| Description | Japan 250 Declining Balance XX years |
| Method Type | Formula |
| Calculation Basis | NBV |
| Depreciable Basis Rule | Dual Rate Evaluation |
| Depreciate in Year Retired | Yes |
| Exclude Salvage Value | Yes |
| Straight Line Method | No |
| Polish Adjustment Calculation Basis | No |
| Guarantee Rate Evaluation Method | Yes |
| Use Japan NBV Calculation for Impairments | Yes |
| Life Years | XX Years |
| Months | 0 |
| Formula | Decode(Sign(Floor(<Cost> * <Guarantee Rate>) - Floor(<NBV at beginning of year> *< Original Rate>)),1,<Revised Rate>, <Original Rate>) |
Dual Rate Evaluation Depreciable Basis Rule
Oracle Assets provides the Depreciable Basis Rules feature to accommodate depreciation method setup requirements not met by the Cost or NBV calculation basis types. The combination of depreciable basis rule and depreciation method determines how depreciable basis is derived.
The Dual Rate Evaluation depreciable basis rule is part of the predefined rules. This depreciable basis rule determines the basis for the calculation of depreciation. The rule checks the rate that is used for calculating depreciation and accordingly determines the depreciable basis. This depreciable basis rule is available only if the FA: Japan 2007 Tax Reforms Features profile option is set to Yes.
The Dual Rate Evaluation depreciable basis rule is available only for depreciation methods that satisfy both of the following conditions:
Depreciation method must be a Formula based method.
The Guarantee Rate Evaluation Method check box is selected for the depreciation method.
The formula that is specified in the Formula field of the depreciation method determines which rate is used for the calculation of depreciation. When the Original rate is used, the depreciation calculation basis is the net book value at the beginning of the fiscal year for the asset. When the Revised rate is used, the basis of depreciation calculation is the NBV of the asset as at the date of the switch from Original rate to the Revised rate.
The following changes have been made for Formula Based methods to support the Japan Tax Reforms: