Annuity Method of Depreciation

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Annuity Method of Depreciation

A way to calculate the depreciation of an asset. Under the annuity method, one begins by calculating the internal rate of return and multiplying that by the original book value of the asset. One then subtracts the product from the cash flow the asset generates each year. This difference is subtracted from the book value (or the previous year's depreciated value) to arrive at the depreciated value. The annuity method is not approved by the Generally Accepted Accounting Principles.
References in periodicals archive ?
On private finance schemes and finance leases transferring to the Coun cil's balance sheet under International Financial Reporting Standards the Council will adopt the annuity method when calculating MRP on these schemes.
It further found that there was no indication in the legislative history of section 72(t) that Congress intended the election of the annuity method to preclude the use of other exceptions to the penalty The court also concluded that the purpose of the penalty, to discourage early withdrawals from retirement savings accounts, is not defeated if a taxpayer withdraws money from an IRA under more than one exception.
Distributees will henceforth be allowed to switch freely from the amortization or annuity method to a schedule that satisfies Sec.
Observation: Even though the husband and wife resided in a community property state, divorcing couples in other states also can take advantage of the annuity method in equalizing their marital assets.