A positive cost adjustment occurs when the cost of an asset is increased from the current cost.
In the following example:
Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: 2
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.
In this example, the positive cost adjustment from 10,000.00 to 20,000.00 occurs in year 3, month 7.
Note: In this example, although depreciation is shown only through year 3, it should be assumed that depreciation will continue until the asset is fully reserved.
The following table shows depreciation information for year one:
| Month | Cost | Depreciation | Reserve | Depreciation Basis |
|---|---|---|---|---|
| 1 | 10,000.00 | 333.33 | 333.33 | 10,000.00 |
| 2 | 10,000.00 | 333.33 | 666.67 | 10,000.00 |
| 3 | 10,000.00 | 333.33 | 1,000.00 | 10,000.00 |
| 4 | 10,000.00 | 333.33 | 1,333.33 | 10,000.00 |
| 5 | 10,000.00 | 333.33 | 1,666.67 | 10,000.00 |
| 6 | 10,000.00 | 333.33 | 2,000.00 | 10,000.00 |
| 7 | 10,000.00 | 333.33 | 2,333.33 | 10,000.00 |
| 8 | 10,000.00 | 333.33 | 2,666.67 | 10,000.00 |
| 9 | 10,000.00 | 333.33 | 3,000.00 | 10,000.00 |
| 10 | 10,000.00 | 333.33 | 3,333.33 | 10,000.00 |
| 11 | 10,000.00 | 333.33 | 3,666.67 | 10,000.00 |
| 12 | 10,000.00 | 333.33 | 4,000.00 | 10,000.00 |
The following table shows depreciation information for year two:
| Month | Cost | Depreciation | Reserve | Depreciation Basis |
|---|---|---|---|---|
| 1 | 10,000.00 | 200.00 | 4,200.00 | 6,000.00 |
| 2 | 10,000.00 | 200.00 | 4,400.00 | 6,000.00 |
| 3 | 10,000.00 | 200.00 | 4,600.00 | 6,000.00 |
| 4 | 10,000.00 | 200.00 | 4,800.00 | 6,000.00 |
| 5 | 10,000.00 | 200.00 | 5,000.00 | 6,000.00 |
| 6 | 10,000.00 | 200.00 | 5,200.00 | 6,000.00 |
| 7 | 10,000.00 | 200.00 | 5,400.00 | 6,000.00 |
| 8 | 10,000.00 | 200.00 | 5,600.00 | 6,000.00 |
| 9 | 10,000.00 | 200.00 | 5,800.00 | 6,000.00 |
| 10 | 10,000.00 | 200.00 | 6,000.00 | 6,000.00 |
| 11 | 10,000.00 | 200.00 | 6,200.00 | 6,000.00 |
| 12 | 10,000.00 | 200.00 | 6,400.00 | 6,000.00 |
The following table shows depreciation information for year three:
| Month | Cost | Depreciation | Reserve | Depreciation Basis |
|---|---|---|---|---|
| 1 | 10,000.00 | 166.67 | 6,566.67 | 10,000.00 |
| 2 | 10,000.00 | 166.67 | 6,733.33 | 10,000.00 |
| 3 | 10,000.00 | 166.67 | 6,900.00 | 10,000.00 |
| 4 | 10,000.00 | 166.67 | 7,066.67 | 10,000.00 |
| 5 | 10,000.00 | 166.67 | 7,233.33 | 10,000.00 |
| 6 | 10,000.00 | 166.67 | 7,400.00 | 10,000.00 |
| 7 | 20,000.00 | 333.33 | 7,733.33 | 20,000.00 |
| 8 | 20,000.00 | 333.33 | 8,066.67 | 20,000.00 |
| 9 | 20,000.00 | 333.33 | 8,400.00 | 20,000.00 |
| 10 | 20,000.00 | 333.33 | 8,733.33 | 20,000.00 |
| 11 | 20,000.00 | 333.33 | 9,066.67 | 20,000.00 |
| 12 | 20,000.00 | 333.33 | 9,400.00 | 20,000.00 |
In the following example:
Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: 2
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.
In this example, the positive cost adjustment from 10,000.00 to 20,000.00 occurs in year 3, month 7, with an effect beginning year 2, month 7. Note that the depreciation amount of 1,333.33 shown for year 3, month 7 includes the current period depreciation expense of 333.33 plus the catchup depreciation. The amount of catchup depreciation between year 2, month 7 and year 3, month 2 is 1,000.00.
Note: In this example, although depreciation is shown only through year 3, it should be assumed that depreciation will continue until the asset is fully reserved.
The following table shows depreciation information for year one:
| Month | Cost | Depreciation | Reserve | Depreciation Basis |
|---|---|---|---|---|
| 1 | 10,000.00 | 333.33 | 333.33 | 10,000.00 |
| 2 | 10,000.00 | 333.33 | 666.67 | 10,000.00 |
| 3 | 10,000.00 | 333.33 | 1,000.00 | 10,000.00 |
| 4 | 10,000.00 | 333.33 | 1,333.33 | 10,000.00 |
| 5 | 10,000.00 | 333.33 | 1,666.67 | 10,000.00 |
| 6 | 10,000.00 | 333.33 | 2,000.00 | 10,000.00 |
| 7 | 10,000.00 | 333.33 | 2,333.33 | 10,000.00 |
| 8 | 10,000.00 | 333.33 | 2,666.67 | 10,000.00 |
| 9 | 10,000.00 | 333.33 | 3,000.00 | 10,000.00 |
| 10 | 10,000.00 | 333.33 | 3,333.33 | 10,000.00 |
| 11 | 10,000.00 | 333.33 | 3,666.67 | 10,000.00 |
| 12 | 10,000.00 | 333.33 | 4,000.00 | 10,000.00 |
The following table shows depreciation information for year two:
| Month | Cost | Depreciation | Reserve | Depreciation Basis |
|---|---|---|---|---|
| 1 | 10,000.00 | 200.00 | 4,200.00 | 6,000.00 |
| 2 | 10,000.00 | 200.00 | 4,400.00 | 6,000.00 |
| 3 | 10,000.00 | 200.00 | 4,600.00 | 6,000.00 |
| 4 | 10,000.00 | 200.00 | 4,800.00 | 6,000.00 |
| 5 | 10,000.00 | 200.00 | 5,000.00 | 6,000.00 |
| 6 | 10,000.00 | 200.00 | 5,200.00 | 6,000.00 |
| 7 | 10,000.00 | 200.00 | 5,400.00 | 6,000.00 |
| 8 | 10,000.00 | 200.00 | 5,600.00 | 6,000.00 |
| 9 | 10,000.00 | 200.00 | 5,800.00 | 6,000.00 |
| 10 | 10,000.00 | 200.00 | 6,000.00 | 6,000.00 |
| 11 | 10,000.00 | 200.00 | 6,200.00 | 6,000.00 |
| 12 | 10,000.00 | 200.00 | 6,400.00 | 6,000.00 |
The following table shows depreciation information for year three:
| Month | Cost | Depreciation | Reserve | Depreciation Basis |
|---|---|---|---|---|
| 1 | 10,000.00 | 166.67 | 6,566.67 | 10,000.00 |
| 2 | 10,000.00 | 166.67 | 6,733.33 | 10,000.00 |
| 3 | 10,000.00 | 166.67 | 6,900.00 | 10,000.00 |
| 4 | 10,000.00 | 166.67 | 7,066.67 | 10,000.00 |
| 5 | 10,000.00 | 166.67 | 7,233.33 | 10,000.00 |
| 6 | 10,000.00 | 166.67 | 7,400.00 | 10,000.00 |
| 7 | 20,000.00 | 1,333.33 | 8,733.33 | 20,000.00 |
| 8 | 20,000.00 | 333.33 | 9,066.67 | 20,000.00 |
| 9 | 20,000.00 | 333.33 | 9,400.00 | 20,000.00 |
| 10 | 20,000.00 | 333.33 | 9,733.33 | 20,000.00 |
| 11 | 20,000.00 | 333.33 | 10,066.67 | 20,000.00 |
| 12 | 20,000.00 | 333.33 | 10,400.00 | 20,000.00 |