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Custom Methods dialog

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You can define and use up to 99 custom methods for calculating depreciation for assets when standard IRS formulas aren't relevant. Some businesses, for example, will need to calculate depreciation based on industry-specific formulas. Any custom methods you define are available for all clients and for all users on a network. Custom methods can be selected from
Method
 in the
Depreciation
 tab in the
Asset Detail
 window.
To open this window, select
Setup
, then
Custom Methods
.
note
All custom methods you define are available to all clients. If you make changes to a custom method, it affects all clients using that method. Therefore, if you make changes to a custom method, you'll need to recalculate depreciation for all assets for each affected client.

Current-period depreciation calculations

When using a custom method, current-period depreciation is calculated in the following manner.
  1. (Basis as adjusted for section 179/AFD, ITC, and salvage value)
  2. x (year's percentage from the Annual Rates table)
  3. x (relevant holding period)
  4. = current-period depreciation
Note that a short year uses the full percentage listed.

Fields & buttons

Method Name list
Lists the custom methods that have already been defined.
Method name
Displays the name of the selected custom method.
note
  • To edit the name of an existing custom method, select a method, select
    Edit
    , edit the name in this field, and select
    Enter
    .
  • When you enter a name for a method that isn't time-based and for which assets using the method will be marked as section 168(f)(1) assets, the name should describe the method because it will print on the statement for property subject to 168(f)(1) election on Form 4562.
Annual rates button
Select this button to open the
Annual Rates
 window, where you can enter depreciation percentages for up to 40 years for the currently highlighted custom method.
note
This button is available only after you select the method and select
Edit
. After entering the rates in the
Annual Rates
 window and selecting
OK
, select
Enter
 in the
Custom Methods
 window to save your changes.
Period convention
Displays the period convention that is selected for the currently highlighted custom method. (To select a period convention, select
Add
 or
Edit
 depending on whether you want to create or modify a custom method.)
Monthly:
 Based on number of months held during year of transaction; full month or no month for month of transaction.
Half Year:
 Give one-half year's depreciation in year of transaction.
Full year / No year:
 Full year or no year, depending on when during the year the transaction occurs.
Full year at acquisition / global disposal treatment:
 Full year at acquisition, or monthly if using a global disposal treatment.

This article applies to:

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