Fixed Assets - EBS (MOSC)

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Balance reduction depreciation method for Colombia

edited Jun 29, 2016 11:27AM in Fixed Assets - EBS (MOSC) 7 commentsAnswered

The new Colombia local regulation, requires to implement a new tax beginning 01 Jan 2016. Assets in the new tax book will use Balance reduction depreciation method (accelerate depreciation method) as indicated in the attach file with examples.

The calculation in Colombia is currently done on EXCEL

The factor=1 - POWER (0.1*Acquisition Cost(VS)/Acquisition Cost , 1/Life)=1 - POWER (0.1 , 1/Life)= 1- (Recovery Value /Adquisition cost)^(1/n)

Where:

n = Years of assets useful life of the fixed assets. 

VS = Recovery Value, that for local regulation must be the 10% of asset´s cost

C = Acquisition cost

In the formula that the country is using, life is in months but in P2P oracle system, life is in Years leading to wrong calculation of the factor ( see attach file).

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