A 4-4-5 calendar is used by some industries like retail and manufacturing to manage their accounting periods. This presents some advantages over a standard calendar since each period will always end on the same day of the week. So this allows for easier comparison of current year sales to prior years in retail and scheduling in manufacturing.
A 4-4-5 calendar only has 364 days (7 days * 52 weeks), so most companies will make an adjustment every 5 years or so with a 53 week year to account for the missing day. Here is a sample calendar for 2013:
The heart of a 4-4-5 module is a calendar that allows you to enter the first and last day of each accounting period. For example, if the first day of the year was December 30, 2012 and the last day of the first accounting period was January 26, 2013 then we would have a 4 week period of 28 days. The second period would follow the same pattern and then the third period would be five weeks. Each quarter would have 13 weeks or 91 days and every month would end on Saturday.
To calculate monthly depreciation with a 4-4-5 calendar, it is critical to calculate based on the number of days in the current period. The formula to calculate depreciation for the first period would be:
—————- X Annual Depreciation = Period Depreciation
This way the annual depreciation is properly spread based on the actual number of days in each period. Many fixed asset software packages do not offer this type of alternate calculation and will just divide the annual depreciation by 12 periods. If your business follows a 4-4-5 calendar then make sure that your depreciation software correctly matches your period accounting.
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