Example: Use the example from step 4 (24 months) and use it in the following formula to find the rate of depreciate per month:

(1.0/24)*2

The depreciation ratio is 0.084.

6.For each month identified by delta from Step 3, 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 5.

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 depreciate 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 know 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 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 6, let's complete Steps a through c for the first month and then repeat these steps for the second month.

Step 6a - 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 5 (0.084):

$2500 x 0.084 = $210

Step 6b - 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 ($210) = $2290

Since $2290 (the depreciated asset value) is greater than the salvage value ($100), the asset value after depreciation is $2290. Go to Step 6c.

Step 6c - The new asset value ($2290) is used to calculate the depreciation for the next month. Let's go through the calculations for the next month.

Step 6a - Assume the asset value of the element is $2290. Calculate the "would-be" depreciation of the month by multiplying the asset value by the declining ratio from Step 5 (0.084):

$2290 x .084 = $192.36

Storage Essentials 5.00.01 User Guide 577