Depreciation of an investment, in formulas
Fiplan splits the depreciable base into annual instalments that are exact to the cent, splits each instalment into twelve months from the month the asset enters service, then places each month in its financial year. The first-year pro rata is therefore calculated by the month.
Notation
- the acquisition value of the asset excl. VAT (including non-recoverable VAT, where applicable)
- the residual value
- the depreciable base
- the depreciation period, in years
- annual instalment , for
- the charge for month of annual instalment , for
- the rank of a month, counted from the month the asset enters service ( for that month)
- the depreciation charge for financial year
- the net book value (valeur nette comptable / nettoboekwaarde) at the close of financial year
The annual instalments
The last annual instalment absorbs the rounding remainder: the instalments add up to exactly the base, and the net value of the asset reaches the residual value at the end of the plan. On €10,000 over 3 years, the annual instalments are 3,333.33, 3,333.33 and 3,333.34.
The monthly charges and the monthly pro rata
The first annual instalment starts in the month the asset enters service: an asset put into service during a financial year carries, that year, only the months it is in service. Each annual instalment runs over twelve consecutive months; it can therefore straddle two financial years. At the end of the plan, a cap (depreciation-engine), if one applies, stops the cumulative total from exceeding the base.
Numerical application · Boulangerie Dupont's van
A van of €32,000.00 excl. VAT (21% VAT recovered), with no residual value, depreciated over 5 years, put into service in March 2027.
In 2028, the financial year carries the last 2 months of the first annual instalment (1,066.70, including the remainder of 533.37 in February 2028) and the first 10 months of the second (5,333.30):
The journal of the complete file carries exactly these amounts: €5,333.30 in 2027, €6,400.00 in 2028, €6,400.00 in 2029.
The journal entry
| Side | Account | Description | Amount |
|---|---|---|---|
| Debit | 242000 | Vehicles | 32,000.00 |
| Debit | 411000 | VAT recoverable | 6,720.00 |
| Credit | 550000 | Credit institutions — Current accounts | 38,720.00 |
| Side | Account | Description | Amount |
|---|---|---|---|
| Debit | 630200 | Depreciation of and amounts written down on fixed assets — Depreciation of tangible fixed assets | 533.33 |
| Credit | 249000 | Furniture and vehicles — accumulated depreciation and amounts written down | 533.33 |
The depreciation charge is a non-cash expense: it reduces profit, never cash. Account 249000 is a contra-asset account: its credit balance is deducted from the value of the asset in the balance sheet.
Try it yourself
Change the investment: formulas (1) to (6) are recalculated
A plan of three 12-month financial years, from 2027 to 2029, straight-line, with no residual value. The block calls calculateInvestmentDepreciation then montantsCompagneAmortissement: these are the charges that data entry would write.
Source
Income Tax Code 1992, art. 196, § 2 (CIR 92 / WIB 92): the first annual depreciation instalment is limited to the part of the year during which the asset is used (pro rata temporis); art. 196, § 3: declining-balance depreciation (amortissement dégressif / degressieve afschrijving) is closed to companies for acquisitions since 2020.
Minimum standard chart of accounts (plan comptable minimum normalisé / minimumindeling van een algemeen rekeningenstelsel): accounts 24 (furniture and vehicles), their accumulated depreciation, and 630 (depreciation charges).
Fiplan conventions, declared in the code: the rounding remainder on the last annual instalment and on the twelfth month (repartirExactement); the monthly pro rata from the month the asset enters service; annual instalments of twelve consecutive months, which can straddle two financial years (a point noted in the code, D27).