HP Storage Essentials V5.1 User Guide Second Edition (Linux Release) (T4283-96056, November 2006)

Chargeback Manager638
• 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.
Step 5a - Assume the asset value of the element is $2395. Calculate the "would-be" depreciation of
the month by multiplying the asset value by the declining ratio from Step 4 (0.042):
$2395 x .042 = $100.59
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 ($2395) - Depreciation for the month ($100.59) =
$2294.41
Since the $2294.41 (the depreciated asset value) is greater than the salvage value ($100), the
asset value for the month is $2294.41. Go to Step 5c. The management server repeats Steps 5a
through 5c for 12 months (the delta from Step 2), unless the depreciated asset value reaches the
salvage value or 0 if the salvage value is not specified.
Calculating Double Declining Balance
The Double Declining Balance method and the Fixed Declining Balance are very similar. The
difference is that instead of using the depreciation ratio determined by (1.0 / life), the management
server doubles the ratio to increase the rate of depreciation. This provides for a more realistic
depreciation when your asset tends to lose its value in the early part of its life. For instance, a new
car’s blue book value decreases dramatically once it is sold and driven off the lot of the car
dealership.
These instructions describe how the management server performs the double declining balance
calculation. An example is provided for each step so that you can try the calculations for yourself:
1. The management server rolls back the purchase date to the beginning of the purchase month. If
the purchase date is later than today (for example, a future purchase), then the purchase date is
roll back to today.
Example: Assume the purchase date of an element is January 15, 2003. The management
server adjusts the purchased date to January 1, 2003 when calculating months to depreciate.