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1. |
Abolishment of salvage value and limit on depreciable amount |
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(1) |
Tangibles which will be in service after April 1, 2007 |
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Salvage value (10% of acquisition cost) and the limit on depreciable amount (95% of acquisition cost) were abolished,
therefore, companies can depreciate assets until the net book value (NBV) of the assets is 1 yen. |
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(2) |
Tangibles which were in service prior to March 31, 2007 |
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Tangibles which were in service prior to March 31, 2007 will continue to be depreciated under the old method (ie. until NBV of assets reach 5% of acquisition cost).
Thereafter, companies can evenly depreciate the remaining NBV over a period of 5 years until the NBV reaches 1 yen. |
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2. |
Revision of depreciation rates used for calculating declining balance method |
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(1) |
Depreciation rates: 250% greater than the straight-line method |
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(2) |
Methodology: |
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(a) |
Depreciation expense for the year = Acquisition cost or Beginning NBV * (1) |
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(b) |
If depreciation expense calculated by the above formula is less than the amount that calculated by the following formula, the following formula will apply until NBV of assets is reduced to 1 yen. |
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NBV / Residual number of years in its estimated useful life |
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3. |
Evaluation method of depreciable assets for property (depreciable assets) taxes |
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The evaluation method for depreciable assets for property tax return purposes remains unchanged. |
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