• 산업경영시스템학회지
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• 제36권1호
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• pp.53-57
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• 2013

Several different depreciation systems may be used for group depreciation. The vintage group procedure treats the same type of property placed in service during the same year as a distinct group for depreciation purposes; therefore an estimate of the probable average service life and net salvage ratio(s) of each individual vintage is necessary. The vintage group procedure calculates an accrual rate for each vintage and the accrual rate for an account for specific calendar year is the weighted average vintage accrual rate for that calendar year. A further refinement would be to divide each vintage into groups such that all of the dollars in a group have the same estimated life-an equal life group (ELG). Then each ELG is depreciated over its estimated life. The effect is to recover each dollar over the estimated number of years it is in service. Each vintage is divided into several equal life groups (ELGs) such that all the property in a specific ELG has the same estimated life. The accrual rate for each ELG is based on the estimated life of that ELG. The vintage accrual rate for a specific year is the weighted average ELG accrual rate for that calendar year. In this paper, we illustrate the calculations of vintage accrual rates for each of the calendar years by the ELG depreciation systems.

• 산업경영시스템학회지
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• 제35권1호
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• pp.148-153
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• 2012

When the number of items of same type of industrial property is quite large, calculating depreciation for a group of such items may be more efficient than depreciating each item separately. Several different depreciation systems may be used for group depreciation. If the life of each vintage in an account are not estimated, then the BG procedure can be used; the BG procedure puts all vintages of the same type of property into a single broad group for depreciation purposes. In this case, only an estimate of the PASL and the net salvage ratio for all the property in the broad group is needed to calculate the depreciation charge.

• 산업경영시스템학회지
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• 제37권1호
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• pp.115-119
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• 2014

When the number of items of same type of industrial property is quite large, calculating depreciation for a group of such item may be more efficient than depreciating each item separately. Also, predicting the service life of a specific individual unit is very difficult to do with any degree of accuracy. Estimating the probable average service life (PASL) of many units (or dollars) is not an easy task; however, an average life of many units can probably be predicted with a much higher degree of accuracy than the life of some particular unit. Using the average of many units allows for some units having relatively short lives and some units having relatively long lives without specifying whether a particular unit will have a short or a long life. If the life of each vintage in an account are not estimated, then the broad group procedure can be used. The broad group procedure depreciates the several vintage in an account as a single group. The PASL for this procedure is the estimate of the average of lives of the individual dollars in the group. If the estimated PASL's of the vintages are not the same, then a weighted average PASL would have to be calculated for each calendar year. In this paper, we illustrate the calculations of accrual rates and the annual depreciation charge for each of the calendar years by the broad group depreciation procedure.

• 산업경영시스템학회지
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• 제46권1호
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• pp.91-104
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• 2023

The records system is believed to have started in Italy in the 14th century in line with trade developments in Europe. In 1491, Luca Pacioli, a mathematician, and an Italian Franciscan monk wrote the first book that described double-entry accounting processes. In many countries, including Korea, the government accounting standards used single-entry bookkeeping rather than double-entry bookkeeping that can be aggregated by account subject. The cash-based and single-entry bookkeeping used by the government in the past had limitations in providing clear information on financial status and establishing a performance-oriented financial management system. Accordingly, the National Accounting Act (promulgated in October 2007) stipulated the introduction of double-entry bookkeeping and accrual accounting systems in the government sector from January 1, 2009. Furthermore, the Korean government has also introduced International Financial Reporting Standards (IFRS), and the System of National Accounts (SNA). Since 2014, Korea owned five national accounts. In Korea, valuation began with the 1968 National Wealth Statistics Survey. The academic origins of the valuation of national wealth statistics which had been investigated by due diligence every 10 years since 1968 are based on the 'Engineering Valuation' of professor Marston in the Department of Industrial Engineering at Iowa State University in the 1930s. This field has spread to economics, etc. In economics, it became the basis of capital stock estimation for positive economics such as econometrics. The valuation by the National Wealth Statistics Survey contributed greatly to converting the book value of accounting data into vintage data. And in 2000 National Statistical Office collected actual disposal data for the 1-digit asset class and obtained the ASL(average service life) by Iowa curve. Then, with the data on fixed capital formation centered on the National B/S Team of the Bank of Korea, the national wealth statistics were prepared by the Permanent Inventory Method(PIM). The asset classification was also classified into 59 types, including 2 types of residential buildings, 4 types of non-residential buildings, 14 types of structures, 9 types of transportation equipment, 28 types of machinery, and 2 types of intangible fixed assets. Tables of useful lives of tangible fixed assets published by the Korea Appraisal Board in 1999 and 2013 were made by the Iowa curve method. In Korea, the Iowa curve method has been adopted as a method of ASL estimation. There are three types of the Iowa curve method. The retirement rate method of the three types is the best because it is based on the collection and compilation of the data of all properties in service during a period of recent years, both properties retired and that are still in service. We hope the retirement rate method instead of the individual unit method is used in the estimation of ASL. Recently Korean government's accounting system has been developed. When revenue expenditure and capital expenditure were mixed in the past single-entry bookkeeping we would like to suggest that BOK and National Statistical Office have accumulated knowledge of a rational difference between revenue expenditure and capital expenditure. In particular, it is important when it is estimated capital stock by PIM. Korea also needs an empirical study on economic depreciation like Hulten & Wykoff Catalog A of the US BEA.