Reconciling the depreciation calculation in the Low Value Pool

This support note applies to:

• AE Assets (AU)

The calculation of depreciation for assets in the Low Value Pool (LVP) are for the entire period and are not on a pro rata basis even if bought or sold throughout the year.

Depreciation on the values in the LVP is calculated on the diminishing value basis using the following rates:

• Opening balance of the pool is calculated at 37.5%;
• Total of assets purchased in the current year at 18.75%; and
• Total of partially depreciated assets added to the pool in the current year at 37.5%.

Example 1

The value of the pool consists of:

The Opening value $1609.

A partially depreciated asset in the control group Plant & Equipment opening written down value of $900.

A new asset was purchased in the year for $800.

Assuming 2 periods the first period being 1/7/2001 to 31/12/2001 then depreciation for the period would be $550.

Being -

$304 for the opening value - $603/365.25*184

$170 for the partially depreciated asset - $338/365.25*184

$ 76 for the new asset purchased in the year - $150/365.25*184

Where:

365.25 is the number of days in a year and

184 is the number of days in the period.

Example 2

When the period end is performed and depreciation calculated the year to date depreciation is $1091.

Being -

$603 for the opening value - $1609*37.5%

$338 for the partially depreciated asset - $900*37.5%

$150 for the new asset purchased in the year - $800*18.75%

Values of the pool at the end of the financial year:

If an asset is sold during the year, this has no effect on the current year values of the pool, the year to date depreciation or the closing written down values of each of the asset types.

When an asset is sold, the only effect on the value of the pool is to reduce the Closing value of the pool in the current year by the amount sold.

Values of the pool after sale of an asset for $500.