What is Diminishing Value?

Diminishing Value is a method of depreciation that applies a set percentage to the open written down value each year. This is the amount remaining for depreciation after deducting prior depreciation and other adjustments from the original cost.

What is the value of depreciation for Diminishing Value for Assets acquired up to and before the 9 May 2006?

The previous value for the Diminishing Value method of depreciation was 150% of an asset's effective life for assets acquired up to and including the 9 May 2006. Assets acquired on or before the 9 May 2006 will not change and continue to attract a diminishing value of 150%.

What is the value of depreciation for Diminishing Value for for Assets acquired on or after the 10 May 2006

Effective from 10 May 2006 the new rate of depreciation for Diminishing Value is 200% of an asset's effective life. This new value will apply to all eligible assets both new and second hand acquired on or after 10 May 2006 including assets with statutory caps.

NOTE: YOU HAVE TO BE RUNNING MYOB ASSETMANAGER PRO 3.5 OR LATER (inc GRAGA ASSETMANAGER PRO TO HAVE THIS APPLY.

What is the formula for the calculation of Diminishing Value Depreciation?

Using the example of a $4000 asset with an effective life of 4 years on a diminishing value basis:

Currently AssetManager Pro will perform the following calculation:

150 ÷ 4 = 37.5% X $4000 = $1500 depreciation deduction in the first year.

According to the Government's Budget announcements, for new assets acquired on or after 10 May, 2006 the calculation will be as follows:

200 ÷ 4 = 50% X $4000 = $2000 depreciation deduction in the first year.