T Nation

Amortization Question for T-Nation Accountants


#1

I have a question if you don't mind..

do you guys know what a change in the period of amortization of leasehold improvements would be considered? like.. if someone were to want to change the period from 20 years to 15 years?

would it be considered a change in accounting principle? I can't find it anywhere in the codification

thanks for your time


#2

Is it even a material difference?

Do you want the text book answer or real life?


#3

thank you for your prompt reply

it would be a material difference, and ill take both answers lol.

I really appreciate it


#4

Hey beans (sorry for the threadjack):

Is there a formula for computing simple (not compound) interest on a sum that increases by a regular amount every week? Say, start with $5000 and it increases $5000 every week. Now I’m 3 years down the road and I have a total, but I’m also entitled to 12% interest on the the amounts owed that have accumulated. Can I do this with a formula without having to do the math for each week? Make sense?


#5

Personally I’d consider that a change in estimate and record the new amortization amount prospectively.

So you’d have a new basis in your asset (cost - depreciation up to that point) and record the remaining depreciation over the remaining life of the asset.

That being said, the change in estimate should be supportable (we have XXX evidence that the asset will only last 15 years as opposed to the 20 we originally assumed).


#6

[quote]Mr. Walkway wrote:
thank you for your prompt reply

it would be a material difference, and ill take both answers lol.

I really appreciate it[/quote]

text book is a change in accounting estimate.

In the real world the only reason someone would do this is to massage their income. You don’t want your numbers to be big profit one year followed by small loss, then big profit, etc etc etc. So you try and massage your income levels so they stay even or show steady trends, not peaks an valleys. That being the case, lmao, you damn well don’t want to have to disclose it.


#7

[quote]jjackkrash wrote:
Hey beans (sorry for the threadjack):

Is there a formula for computing simple (not compound) interest on a sum that increases by a regular amount every week? Say, start with $5000 and it increases $5000 every week. Now I’m 3 years down the road and I have a total, but I’m also entitled to 12% interest on the the amounts owed that have accumulated. Can I do this with a formula without having to do the math for each week? Make sense?
[/quote]

Future value of an annuity I think? It is either future value or present value, one of the two, google foo “future value of an annuity” and you should be able to find the excel formula to make that work.

That is finance class lol, and above my pay grade.


#8

[quote]jjackkrash wrote:
Hey beans (sorry for the threadjack):

Is there a formula for computing simple (not compound) interest on a sum that increases by a regular amount every week? Say, start with $5000 and it increases $5000 every week. Now I’m 3 years down the road and I have a total, but I’m also entitled to 12% interest on the the amounts owed that have accumulated. Can I do this with a formula without having to do the math for each week? Make sense?
[/quote]

You trying to calculate how much you’ll have for retirement in X number of years?

Personally I just have a spreadsheet set up with my monthly contributions and an assumed growth rate. Then whenever I change my monthly contribution amount I can update the spreadsheet going forward and at any given time I can see how much I’ll have for retirement at any given age.

I’m sure there is a formula for it, I just don’t know what it is.


#9

[quote]LankyMofo wrote:
That being said, the change in estimate should be supportable (we have XXX evidence that the asset will only last 15 years as opposed to the 20 we originally assumed).[/quote]

Yeah… Which isn’t as likely in my experience, but I deal with much smaller (for the most part) companies than you.


#10

Thank you Beans and Mofo, greatly appreciated


#11

Walkway - just to keep flexing my accounting knowledge, a change in accounting principle would be if you decided to stop straight lining all of your assets and begin using another method of depreciation, say double declining balance.

Useful life of an asset is inherently an estimate, so any change in that would be a change in estimate.


#12

[quote]countingbeans wrote:

[quote]LankyMofo wrote:
That being said, the change in estimate should be supportable (we have XXX evidence that the asset will only last 15 years as opposed to the 20 we originally assumed).[/quote]

Yeah… Which isn’t as likely in my experience, but I deal with much smaller (for the most part) companies than you.

[/quote]

Eh, the evidence can be a bit flexible. :slight_smile:


#13

That’s a messy calculation; it’s certainly not one formula. You’ll need to treat each deposit as a separate calculation, then sum the results.

For example, if you’re first deposit was exactly 1 year ago, then that is now worth $5000 x 1.12 = 5600
The deposit made 51 weeks ago is worth $5000 x 1.12 (51/52) = $5492

And so on…

Summing the results gets you your total today. Like the others said, easily set up in Excel.

Did I understand your question correctly?


#14

I’m trying to think of what kind of intangible we’re talking about where a 5 year change in amort would be material…

My assumption being, if they have that kind of amort expense, they damn well have enough income/assets/equity to up your materiality levels.


#15

[quote]LankyMofo wrote:
Walkway - just to keep flexing my accounting knowledge, a change in accounting principle would be if you decided to stop straight lining all of your assets and begin using another method of depreciation, say double declining balance.

[/quote]

Arguing purely for the sake of it, you can put forth the argument that even that is a change in estimate, because when you get the benefit is an estimate too.

DDB makes a lot more sense for a computer than it does a desk chair. But you can effectuate the same with a 3 year UL rather than a 5.


#16

[quote]LankyMofo wrote:

[quote]jjackkrash wrote:
Hey beans (sorry for the threadjack):

Is there a formula for computing simple (not compound) interest on a sum that increases by a regular amount every week? Say, start with $5000 and it increases $5000 every week. Now I’m 3 years down the road and I have a total, but I’m also entitled to 12% interest on the the amounts owed that have accumulated. Can I do this with a formula without having to do the math for each week? Make sense?
[/quote]

You trying to calculate how much you’ll have for retirement in X number of years?

Personally I just have a spreadsheet set up with my monthly contributions and an assumed growth rate. Then whenever I change my monthly contribution amount I can update the spreadsheet going forward and at any given time I can see how much I’ll have for retirement at any given age.

I’m sure there is a formula for it, I just don’t know what it is. [/quote]

Thanks. I’m working on prejudgment interest on a judgment dealing with back pay owed for regular intervals, i.e., money short on a paycheck every two weeks for a long time.


#17

[quote]Dr. Pangloss wrote:
That’s a messy calculation; it’s certainly not one formula. You’ll need to treat each deposit as a separate calculation, then sum the results.

For example, if you’re first deposit was exactly 1 year ago, then that is now worth $5000 x 1.12 = 5600
The deposit made 51 weeks ago is worth $5000 x 1.12 (51/52) = $5492

And so on…

Summing the results gets you your total today. Like the others said, easily set up in Excel.

Did I understand your question correctly?[/quote]

God damn, now I have to learn how to use Excel.


#18

[quote]jjackkrash wrote:
Hey beans (sorry for the threadjack):

Is there a formula for computing simple (not compound) interest on a sum that increases by a regular amount every week? Say, start with $5000 and it increases $5000 every week. Now I’m 3 years down the road and I have a total, but I’m also entitled to 12% interest on the the amounts owed that have accumulated. Can I do this with a formula without having to do the math for each week? Make sense?
[/quote]

http://www.ultimatecalculators.com/future_value_annuity_calculator.html

One of those might work jjackkrash. I think they use compounding interest though. Def finance, lol…

If I follow correctly you can just do this. It took about 1 minute. That’ll be $100…

Edit:

ehhh, I’ll give you 20% off for messing up the rate…


#19

Deleted


#20

[quote]jjackkrash wrote:

[quote]LankyMofo wrote:

[quote]jjackkrash wrote:
Hey beans (sorry for the threadjack):

Is there a formula for computing simple (not compound) interest on a sum that increases by a regular amount every week? Say, start with $5000 and it increases $5000 every week. Now I’m 3 years down the road and I have a total, but I’m also entitled to 12% interest on the the amounts owed that have accumulated. Can I do this with a formula without having to do the math for each week? Make sense?
[/quote]

You trying to calculate how much you’ll have for retirement in X number of years?

Personally I just have a spreadsheet set up with my monthly contributions and an assumed growth rate. Then whenever I change my monthly contribution amount I can update the spreadsheet going forward and at any given time I can see how much I’ll have for retirement at any given age.

I’m sure there is a formula for it, I just don’t know what it is. [/quote]

Thanks. I’m working on prejudgment interest on a judgment dealing with back pay owed for regular intervals, i.e., money short on a paycheck every two weeks for a long time.
[/quote]

@12% ?
Oh my anus