Amortized Adjustments

After an amortized adjustment, the depreciation amount is adjusted by a Rate
Adjustment Factor (RAF) which allocates amortized change over the remaining life.
The RAF is not visible via the forms but can be viewed in an asset trace.

Formula for the Rate Adjustment Factor is:

RAF = (New Recoverable Cost - Recalculated Depreciation Reserve) / New Recoverable Cost

For example:

Cost:   6000
Life:   60 months
Method: STL
DPIS:   JAN 01, 2000
Prorate Date: JAN 01, 2000

Depreciation = 6000/ 5 years/ 12 periods per year = $100 per period

Status in JUL-00 after six months depreciation:
Cost:   6000
Reserve: 600
NBV:    5400

In JUL-00, post an amortized cost adjustment (increase in cost) of 6000
resulting in:
Cost:   12000
Reserve:  600
NBV:    11400


RAF = (12000 - (12000/ 5 years/12 periods per year * 6 periods)) / 12000
    = (12000 - 1200) / 12000
    = 10800 / 12000 = .9

Depreciation calculation in subsequent months:
 periodic depreciation = adjusted cost / life in years / periods per year / RAF
 11400 / 5 / 12 / .9 = 211.11

Current reserve: 6 periods @ 100.00 = 600
Remaining:      54 periods @ 211.11 = 11399.94

Total Accumulated Depreciation after 60 months = 11999.94 (.06 due to rounding)

Reference: R11i How is Depreciation Calculated After an Amortized Adjustment? [ID 166260.1]