In recording plant assets, how do I calculate the annual depreciation?

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PDA

josebay99

Mar 14, 2009, 04:14 PM

I know the first year is the original cost minus the salvage value, divided by the years of useful life. How is the last month calculated?

Say the original cost of a truck is $8,500 and minus a salvage value of $1,000, divided by a 5-year life. This equals $1500 for a full year, but if it was bought in May, the $1500 divided by 12 months, times 5 months equals $625. Do I just take $1500 minus $625? Or is there a more complicated answer?

hamzashakaa

Mar 15, 2009, 08:32 AM

Actually, you are almost right but you should multiply the $1,500 by 7 months from may to december not by 5 months. so the depreciation for the first year will be 875.