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.
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
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.
Example: 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)