HP Storage Essentials SRM 6.0 User Guide for Enterprise Edition and Standard Edition SRM Software (July 2008)

HP Storage Essentials SRM 6.0 User Guide 659
3. The management server takes the user-specified depreciation period and use it as the life of the
asset.
Example: Let's assume the depreciation period is 24 months and that it is also the life of the
asset.
4. The management server calculates the declining ratio using this formula: (1.0 / life). This
determines the rate at which depreciation should occur each month.
Example: Use the example from step 3 (24 months) in the following formula to find the rate of
depreciate per month:
1.0/24
The depreciation ratio is 0.042.
5. For each month identified by delta from Step 2, the management server calculates the following:
The example for the following steps can be found at the end of these instructions.
a. Determine the “would-be” depreciation for the month. This means multiplying the asset value
for the month by the declining ratio from step 4.
b. Subtract the depreciation for the month from the asset value for the month. If the result is less
than the salvage value, it means the asset value after depreciation would be less than the
salvage. In this case, the management server simply depreciates the asset to the salvage
value. Once the management server depreciates an asset down to its salvage value, the
depreciation for that asset stops.
c. If the management server subtracts the depreciation for the month from the asset value and
the result is greater than the salvage value, then the management server knows it is safe to
depreciate the asset by the depreciation amount calculated in step a. The depreciated asset
value for the month would be asset value minus depreciation. The new asset value will be
used to compute the depreciation for the next month. This process continues until one of the
following occurs:
• The management server has depreciated the asset value for the number of months equal
to delta.
• The asset value has depreciated down to the salvage cost. If no salvage cost is specified,
then the asset value has depreciated down to 0.
Example: For Step 5, let's complete Steps a through c for the first month and then repeat these steps
for the second month.
Step 5a - Let's assume the asset value of the element is $2500. Calculate the "would-be"
depreciation of the month by multiplying the asset value by the declining ratio from Step 4 (0.042):
$2500 x .042 = $105
Step 5b - Assume the salvage value is $100. Determine if the asset value after depreciation is less
than the salvage value by using the following formula.
Asset value of the month ($2500) - Depreciation for the month ($105) = $2395
Since $2395 (the depreciated asset value) is greater than the salvage value ($100), the asset value
after depreciation is $2395. Go to Step 6c.
Step 5c - The new asset value ($2395) is used to calculate the depreciation for the next month. Let's
go through the calculations for the next month.