DEPRECIATION

POLICIES
• Canadá
• United Kingdom
• USA
• Perú
• Ecuador
Canadá
Canadá specifies Under the United States Depreciation
System, the Internal Revenue Service publishes a detailed guide
that includes a life table. The table also incorporates specific
lives used for certain purposes (for example, office furniture,
computers, automobiles) that replace the life of commercial
use. The United States tax depreciation is calculated using the
straight-line double-declining balance method or the straight-
line method, at the taxpayer's choice.
Straight line method:
For example, a vehicle that depreciates in 5 years purchased at a cost of $ 17,000 and
will have a salvage value of $ 2000. Then this vehicle will depreciate $ 3,000 per year,
that is, (17-2) / 5 = 3 This table illustrates the linear method of depreciation. The book
value at the beginning of the first year of depreciation is the original cost of the asset.
At any time, the book value is equivalent to the original cost less accumulated
depreciation.
With the declining balance method, you can find the depreciation rate that would
allow a full depreciation at the end of the period, using the formula:

where N is the estimated life of the asset (for example, in years).

 UNITED
KINGDOM
 Research and development – 100%
The Capital Allowances are capital allowances are available to
granted for depreciation companies which incur qualifyinfg
expenditure of a capital nature on
of equipment and other R&D.
assets
Investment in energy-saving equipment and
environmentally-friendly equipment 100% first year
capital
USA
Property, Plant and equipment may be writen off
over its effective useful life as established under a
statutory cost recovery system. For property
acquired or placed in service after 31 December
1986, the capitalized costs must be depreciated
using the Modified Accelerated Cost Recovery
System (MACRS) over a life of three to 39 years.

The modified accelerated cost recovery system

(MACRS) is the proper depreciation method for most
assets.
• MACRS allows for greater accelerated depreciation over longer time
periods. This is beneficial since faster acceleration allows individuals
and businesses to deduct greater amounts during the first few years
of an asset's life, and relatively less later. Depreciation using MACRS
can be applied to assets such as computer equipment, office
furniture, automobiles, fences, farm buildings, racehorses, etc.
PERU
THE ACCOUNTING REGULATIONS IN PERU, THE STRAIGHT LINE
METHOD IS THE MOST COMMON AMONG THE COUNTERS OF
PERU, YOU CAN USE ANY METHOD ALWAYS AND WHEN YOU
DO NOT EXCEED THE MAXIMUM RATE OF DEPRECIATION AND
COST OF ACQUISITION OF FIXED ASSETS, YOU CAN DEPRECIATE
COMMERCIAL BUILDINGS, CONSTRUCTIONS OR
IMPROVEMENTS 5% OF COST EACH YEAR UP TO A MAXIMUM
OF 20 YEARS, EQUIPMENT FOR PROCESSING DATA FOR A RATE
OF 25%, AND THE TRANSPORTATION VEHICLE AT A RATE OF
20% EACH YEAR,
ECUADOR
 ECUADOR

Depreciation methods
•Legal method
•Straight line method.
•Method of units produced
•Accelerated method.
Legal method:
The depreciation of fixed assets will be made according to the nature of the assets,
I. Real estate (except land), ships, aircraft, barges and similar 5% per year.
II. Facilities, machinery, equipment and furniture 10% per year.
III. Vehicles, transport equipment and mobile road equipment 20% per year.
IV. Computer and software equipment 33% per year
 THE USEFUL LIFE OF FIXED ASSETS

- Buildings: 20 years
- Furniture: 10 years
- Machinery and tools: 10 years
- Business vehicles: 5 years