The Polish tax depreciation method used in the first fiscal year is the Declining Modified Polish tax depreciation method. The calculations are similar to the first year calculation in the Polish Declining Modified with a Switch to Declining Classic and Flat Rate depreciable basis rule. See: Polish Declining Modified with a Switch to Declining Classic and Flat Rate.
In the second fiscal year, the depreciation method automatically changes to the Flat Rate method and the asset continues to depreciate using the Flat Rate method until the asset is fully depreciated.
| Month | Year 1: 20% * 2.5 (5000.00) | Year 2: 20% (2000.00) | Year 3: 20% (2000.00) | Year 4: 20% (1000.00) |
|---|---|---|---|---|
| M1 | 416.67 | 166.67 | 166.67 | 166.67 |
| M2 | 416.67 | 166.67 | 166.67 | 166.67 |
| M3 | 416.67 | 166.67 | 166.67 | 166.67 |
| M4 | 416.67 | 166.67 | 166.67 | 166.67 |
| M5 | 416.67 | 166.67 | 166.67 | 166.67 |
| M6 | 416.67 | 166.67 | 166.67 | 166.65 |
| M7 | 416.67 | 166.67 | 166.67 | -- |
| M8 | 416.67 | 166.67 | 166.67 | -- |
| M9 | 416.67 | 166.67 | 166.67 | -- |
| M10 | 416.67 | 166.67 | 166.67 | -- |
| M11 | 416.67 | 166.67 | 166.67 | -- |
| M12 | 416.63 | 166.63 | 166.63 | -- |
In this example:
The asset cost is $10,000.
Year 1 uses the Declining Modified Polish tax depreciation method with a depreciation basis of 10,000.
Years 2 through 4 use the Flat Rate method with a depreciation basis of 10,000.
The depreciation reserve amounts at the end of each year are as follows:
Year 1: 5000.00
Year 2: 7000.00
Year 3: 9000.00
Year 4: 10,000.00