Depreciation Formula

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depreciation formula

Transcript of Depreciation Formula

dk depreciation rate

dk* cumulative depreciation

k-# of years

BVkbook value

SVsalvage value

i% reduction of value

RConstant percentage

STRAIGHT LINE METHOD (SLM)dk= depreciation rate per year (constant value)dk*=(k)(dk) accumulated depreciationBVk=B- dk*book value

SINKING FUND METHOD (SFM)dk=(B-SV)[]sinking fund factor (constant value)dk*=dk[]accumulated depreciationBVk=B-dkbook value

DECLINING BALANCE METHOD (DBM)d1=(B)(R)depreciation for the first yeardk=B(1-R)k-1(R)depreciationdk*=B[1-(1-R)k] accumulated depreciation BVk=B(1-R)kbook value