Depreciation is an accounting process where the cost of an asset is accounted for and expensed over its useful life. It shows how the value of the asset decreases over time. Assets that can be depreciated include buildings, fixtures, production equipment, etc. For intangible assets, including many types of intellectual property, this process is called amortization. For commodities mined or harvested from the earth, such as lumber, crude oil or natural gas, this process is called depletion. Here are four common types of depreciation.

Straight Line Method

In order to determine depreciation using this method, the following formula is used:

Depreciation = (Asset cost – Salvage value) / Useful life

The salvage value is the asset’s remaining value after its useful life, and the remaining amount from the asset’s cost is depreciable. The depreciable amount is divided by the asset’s useful life that’s used for depreciation expensing.

Double Declining Balance Depreciation

In order to calculate this method of depreciation, the first step is to look at the asset cost. From there, its useful life must be established. Let’s assume an asset’s book value is \$75,000, it has a useful life of 10 years and a salvage value of \$8,050.

Depreciation = (100 percent / asset’s useful life) X 2

= (100 percent / 10) X 2 = 20 percent

Year 1 depreciation expense = \$75,000 X 20 percent = \$15,000

Year 2 depreciation expense = \$60,000 (\$75,000 – \$15,000 from Year 1) X 20 percent = \$12,000

When beginning the first year, the book value is used as a basis for the asset’s value. The ending book value, which is determined after subtracting depreciation, is the following year’s new book value that will be used to establish next year’s depreciation expense. After it’s repeated through its useful life, the salvage value is left.

Units of Production Depreciation Method

This type of depreciation method depreciates a business’ asset by the units it produces or how many hours the asset is to be run for production over its useful life.

Depreciation = (Number of items manufactured / useful life in measured units) X (asset cost – salvage value)

Let’s assume a supplement pill machine cost \$50,000; it can produce 200 million vitamins over its lifetime; and it will have a salvage value of \$2,500. This assumes it will produce 20 million vitamins in the first 12 months of operation.

(20 million / 200 million) = 10 percent X (\$50,000 – \$2,500) = \$47,500

If the machine produces 10 percent of vitamins over its expected 200 million vitamin unit life, the resulting depreciation amount is \$4,750. At the end of the first year the book value will be \$45,250. Production amounts in future years will dictate how much may be depreciated.

Sum of the Years Digits Approach

Similar to other methods of depreciation, the Sum of the Years Digits (SYD) depreciation method is another type of depreciation that assigns the bulk of depreciation in the beginning years of an asset’s useful life. Looking at the formula is the best way to understand how it works.

Expensing Depreciation = (Asset’s remaining life / Sum of the years digits) X (Asset’s cost – salvage value)

If a machine that’s going to be used by a company to produce widgets costs \$50,000, has a useful life of 16 years and a salvage value of \$3,000, it would look as follows:

1. \$50,000 – \$3,000 = \$47,000 Depreciation Base

2. With 16 years of useful life for the asset, the sum of the years would be: 1 + 2 + 3 + 4 + 5 +6 + 7 + 8 + 9 + 10 + 11 + 12 + 13 + 14 + 15 + 16 = 136. Using the machine referenced above during the first year would equal a Remaining Life of 16. Then, the Remaining Life of 16 years would be divided by the SYD of 136.

3. Using this example, for the first year of using the machine, the formula would be as follows:

16 years (remaining life) / 136 (SYD) = 0.11764. Then, 0.11764 X \$47,000 (Depreciation Base) = \$5,529.08

The next (or second) year’s depreciation expense would by 15 / 136 = 0.110294. Then, 0.110294 X \$47,000 = \$5,183.82

Each subsequent year the SYD would be divided by the remaining years until it’s exhausted and the salvage value should be met.

Depending on the type of business, the type of asset and the accounting approach, there are different ways to expense for property acquired during the course of business.

Bumhza · March 14, 2024 at 9:41 pm

buy ciprofloxacin 500mg generic – keflex drug clavulanate generic

Ttbqkl · March 15, 2024 at 1:19 am

order cipro 500mg generic – buy amoxiclav online cheap amoxiclav order

Svoiqk · March 17, 2024 at 5:12 pm

metronidazole cheap – cost oxytetracycline 250 mg purchase azithromycin pills

Vgtprh · March 18, 2024 at 10:21 am

ciprofloxacin for sale online – erythromycin 250mg canada brand erythromycin 500mg

Rquxcu · March 19, 2024 at 10:30 pm

valacyclovir sale – nemazole cost oral zovirax 400mg

Zjregj · March 20, 2024 at 1:48 pm

ivermectin 12mg for humans – purchase amoxiclav pills sumycin 250mg price

Jixbuw · March 21, 2024 at 7:40 pm

buy flagyl 400mg pill – oxytetracycline 250mg without prescription azithromycin 250mg pills

Rdpnfj · March 22, 2024 at 4:19 pm

acillin pill ampicillin tablet cheap amoxil tablets

Jeeggy · March 23, 2024 at 2:19 pm

lasix drug – atacand online order purchase capoten

Doxzhc · March 26, 2024 at 9:25 am

glycomet cost – order cipro 1000mg generic order lincomycin 500 mg pills

Nnakez · March 26, 2024 at 9:20 pm

order zidovudine generic – order generic roxithromycin allopurinol uk

Gzhlef · March 28, 2024 at 8:03 pm

clozapine 50mg generic – pepcid 20mg over the counter cheap famotidine 40mg

Ylzyqz · March 29, 2024 at 11:30 pm

quetiapine 50mg without prescription – effexor 75mg over the counter cheap eskalith pill

Rbyjrq · March 31, 2024 at 2:17 pm

purchase clomipramine for sale – order tofranil online cheap buy doxepin 25mg pills

Xtahha · March 31, 2024 at 9:03 pm

buy hydroxyzine 10mg without prescription – purchase sarafem online amitriptyline 10mg drug

Rbihjf · April 4, 2024 at 11:25 am

buy cheap generic amoxil – amoxicillin where to buy ciprofloxacin 1000mg cheap

Bwzuav · April 4, 2024 at 4:08 pm

order amoxiclav – linezolid price baycip pills

Einrqv · April 9, 2024 at 9:47 pm

cleocin 150mg brand – chloramphenicol ca chloromycetin cheap

Wsvicy · April 10, 2024 at 4:09 pm

azithromycin 250mg oral – floxin 400mg for sale buy ciplox 500 mg online cheap

Rnqqgo · April 13, 2024 at 1:02 pm

ventolin 4mg uk – albuterol inhalator cost theo-24 Cr for sale

Syohqa · April 15, 2024 at 11:16 pm

clarinex pill – buy aristocort 4mg generic ventolin 4mg sale

Cabiyl · April 16, 2024 at 10:08 am

methylprednisolone 8mg over counter – buy fml-forte without a prescription buy astelin 10ml sale

Eyidgm · April 17, 2024 at 9:23 pm

glyburide 5mg generic – buy glucotrol cheap forxiga tablet

Zvidbl · April 19, 2024 at 11:03 pm

repaglinide 1mg over the counter – jardiance 10mg for sale buy empagliflozin online

Vabbcj · April 23, 2024 at 12:46 pm

order semaglutide without prescription – semaglutide 14mg sale how to buy desmopressin

Akprcf · April 26, 2024 at 3:01 pm

order famciclovir 500mg sale – purchase valaciclovir without prescription how to buy valcivir

Xgbtgt · April 26, 2024 at 10:05 pm

buy lanoxin without prescription – verapamil usa order lasix 40mg for sale

Ddyovm · April 28, 2024 at 11:37 pm

microzide over the counter – zebeta canada order zebeta online cheap

Rsfkwn · April 30, 2024 at 10:47 pm

nitroglycerin – nitroglycerin order valsartan 160mg generic

Vvamws · May 4, 2024 at 3:17 pm

zocor powerful – lopid atmosphere lipitor eleven

Kgwmbe · May 5, 2024 at 8:57 pm

buy viagra professional previous – kamagra absence levitra oral jelly online answer

Eyyara · May 7, 2024 at 5:51 pm

dapoxetine apparent – levitra with dapoxetine wheel cialis with dapoxetine extent

Alvyns · May 8, 2024 at 11:14 am

cenforce husband – kamagra online sake brand viagra watcher

Jhbhmy · May 10, 2024 at 9:32 am

brand cialis late – forzest ourself penisole sensation

Mioeqo · May 11, 2024 at 11:00 pm

cialis soft tabs myth – cialis soft tabs online moan viagra oral jelly online table

Onyvbi · May 12, 2024 at 7:50 pm

brand cialis ourself – forzest arrival penisole back

Mrzjyz · May 14, 2024 at 4:58 pm

cialis soft tabs dozen – levitra soft online easy viagra oral jelly off

Rvlovm · May 18, 2024 at 6:35 pm

cenforce online great – levitra professional pills galaxy brand viagra pills weird

Hwpbch · May 20, 2024 at 7:41 am

acne medication request – acne medication ordinary acne treatment granny

Qtcxob · May 21, 2024 at 3:26 am

asthma medication battle – inhalers for asthma always asthma treatment full

Lvcamq · May 22, 2024 at 4:05 am

uti treatment father – uti antibiotics message treatment for uti roof

Zviker · May 22, 2024 at 11:35 pm

prostatitis treatment after – pills for treat prostatitis mumble pills for treat prostatitis fog

Gebewf · May 24, 2024 at 2:26 am

valacyclovir lazy – valtrex online detail valacyclovir online pair

Opnael · May 28, 2024 at 6:31 am

priligy fever – priligy shadowy dapoxetine wall

Jumrmw · May 31, 2024 at 1:38 am

promethazine affair – promethazine preserve promethazine equal

Hfpcmh · May 31, 2024 at 11:27 am

ascorbic acid halt – ascorbic acid recollection ascorbic acid passionate

Rjzagp · June 2, 2024 at 9:44 pm

fludrocortisone pills own – nexium pills owl prevacid pills quite

Thtcrw · June 6, 2024 at 10:55 pm

order bisacodyl 5 mg sale – order liv52 pills buy liv52 10mg pill

Owhxzj · June 7, 2024 at 8:14 am

brand rabeprazole – metoclopramide 20mg cost domperidone price

Epclih · June 9, 2024 at 12:16 pm

cotrimoxazole 480mg cheap – buy tobra cheap order tobramycin without prescription

Yqyiod · June 10, 2024 at 6:00 am

zovirax without prescription – order eukroma sale buy dydrogesterone cheap

Gkhclc · June 11, 2024 at 1:45 pm

order dapagliflozin generic – cost sinequan 75mg buy precose 25mg without prescription

Lovmww · June 12, 2024 at 7:40 am

order fulvicin 250 mg online cheap – order lopid 300mg online gemfibrozil 300mg tablet

Opogja · June 14, 2024 at 1:09 am

buy enalapril 10mg online cheap – zovirax order how to buy zovirax

Ayelkc · June 14, 2024 at 5:57 am

dramamine 50mg usa – prasugrel tablet order risedronate 35 mg online

Sqdckj · June 16, 2024 at 6:31 am

purchase etodolac online – order monograph generic pletal 100 mg without prescription

Jybexk · June 16, 2024 at 11:54 am

order piroxicam for sale – purchase piroxicam sale order rivastigmine generic

Madgmy · June 27, 2024 at 10:24 am

order generic hydroxyurea – robaxin for sale order robaxin 500mg generic

Fskaaj · June 30, 2024 at 2:53 pm

buy generic divalproex 250mg – cordarone order online topiramate 200mg pill

Xqazvo · June 30, 2024 at 11:09 pm

disopyramide phosphate ca – pregabalin 75mg oral chlorpromazine for sale

Uyqbwe · July 3, 2024 at 1:05 am

oral cytoxan – buy strattera 10mg pills order vastarel without prescription

Fuwczf · July 3, 2024 at 4:12 pm

buy spironolactone 100mg online cheap – spironolactone online order naltrexone online

Ehhewg · July 7, 2024 at 5:05 am

cyclobenzaprine price – order primaquine pills buy enalapril generic

Baaqrg · July 7, 2024 at 11:28 pm

order zofran 4mg online – buy eldepryl paypal requip drug

Qnbquf · July 9, 2024 at 11:20 pm

ascorbic acid 500mg tablet – cheap prochlorperazine pills compro cheap

Lmdxsp · July 11, 2024 at 12:36 am

durex gel where to buy – purchase durex condoms cheap buy xalatan eye drops

Nvdfbf · July 14, 2024 at 11:02 pm

rogaine sale – dutas order buy generic finasteride 1mg

Fyryuc · July 14, 2024 at 11:53 pm

order leflunomide 20mg – calcium carbonate cheap where to buy cartidin without a prescription