You can configure vRealize Business for Cloud to use a depreciation method to compute amortized monthly cost of hardware component (for example, server, disks). You can set the depreciation period to two or seven years.

About this task

vRealize Business for Cloud uses the salvage value of zero dollars.

depreciable cost == original cost

Depreciation rate = 2 / number of depreciation years

For example, 2/5 = 0.4

This is the yearly depreciation of double declining balance method and yearly depreciation of straight line method.

Procedure

  1. Log in to vRealize Business for Cloud as an administrator.
    • https://vRealize_Automation_host_name/vcac/org/tenant_URL (for the vRealize Automation-integrated vRealize Business for Cloud setup)

    • https://vRealize_Business_for_Cloud_host_name/itfm-cloud(for the vRealize Business for Cloud standalone setup)

  2. Click the Administration tab.
  3. Click Business Management.

    Ignore this step for the vRealize Business for Cloud standalone setup.

  4. Expand Calculation Preferences and click Depreciation Method for Hardware Costing.

    vRealize Business for Cloud supports double declining balance and straight line yearly depreciation methods. By default, vRealize Business for Cloud uses the double declining balance method over the period of five years.

  5. Select the required depreciation method.

    Menu Item

    Description

    Straight line

    Yearly straight line depreciation = (original cost - accumulated depreciation) / number of remaining depreciation years

    Double declining balance

    yearly double declining depreciation = (original cost - accumulated depreciation) * depreciation rate
    Note:

    Double declining depreciation for the last year = original cost - accumulated depreciation

  6. Select the depreciation period.

    You can set the depreciation period of two to seven years.

  7. Click Save.

Results

vRealize Business for Cloud calculates the yearly depreciation values of server hardware cost and then divides the value by 12 to arrive at the monthly depreciation.

An Example of Double Declining Depreciation Cost for an Original Cost of $2000 with a Depreciation Period of Five Years

vRealize Business for Cloud uses the maximum value between yearly depreciation of declining balance with multiplied depreciation rate and yearly depreciation of straight line over five years.

Yearly depreciation = Max(yearly depreciation of double declining balance method, yearly depreciation of straight line method)

  • Depreciation cost for the first year: Max[((2000-0) * 0.4), ((2000-0)/5))] = Max(800, 400) => 800 (per_month= 66.67)

  • Depreciation cost for the second year: Max[((2000-800) * 0.4), ((2000-800)/4))] = Max(480, 300) => 480 (per_month= 40)

  • Depreciation cost for the third year: Max[(( 2000-1280) * 0.4), ((2000-1280)/3))] = Max(288, 240) => 288 (per_month= 24)

  • Depreciation cost for the fourth year: Max[(((2000-1568) * 0.4), ((2000-1568)/2))] = Max(172.8, 216) => 216 (per_month= 18)

  • Depreciation cost for the fifth year: Max[((2000-1784) * 0.4), ((2000-1784)/1))] = Max(86.4, 216) => 216 (per_month= 18)