Computation of replacement cost to be recovered

End-of-year processing computes replacement cost information for each equipment unit in the Equipment Master (EQ_MAIN) table as follows:

Step 1.   Converts the estimated life of the unit (depreciation months) into the number of full years.

Step 2.   Adds 1.0 to the Inflation factor field on the General Info tab of the Data -> Equipment Units -> Setup -> Options screen.

Step 3.   Computes extended replacement cost as original cost multiplied by the life years (from step 1) power of inflation factor (from step 2):
   life_years
 (original cost) * (inflation factor)

Step 4.   Computes salvage value as original cost multiplied by the salvage value percentage for the unit.

Step 5.  Computes replacement cost amount as the difference between extended replacement cost (from step 3) and salvage value (from step 4). This item is accessible for each equipment unit in the Query/Report Generator; it uses the EQ_MAIN table. You can also use Web Modules Reporting or any other reporting tool sold separately (such as Microsoft Access) that can attach to the database. Refer to the related documentation for these products.

Step 6.  Computes the amount of replacement cost to be recovered each year:

A. Uses the following formula to compute a divisor:

 life_years
 (1.0 + current earnings rate*) - 1.0
Life_years comes from 1.

* Earnings rate field on the More Info tab of the Data -> Equipment Units -> Setup -> Options screen.

B. Computes current year replacement recovery amount as replacement cost amount (from step 5) times earnings rate divided by the divisor (from step 6a). This item is accessible for each equipment unit in the report/query generator; it uses the EQ_MAIN table.

C. Adds the current year replacement recovery amount to the life replacement recovery amount for the unit. This item is accessible for each equipment unit in the Query/Report Generator; it uses the EQ_MAIN table.