![]() While the straight-line depreciation method is typically used, other methods of depreciation are acceptable for businesses to use under US GAAP to calculate depreciation expense. The useful life of the asset: the estimated amount of time the asset is expected to be functionally used before it needs to be replaced or disposedīelow we have provided the formula to calculate straight-line depreciation expense:īecause this method is the most universally used, we will present a full example of how to account for straight-line depreciation expense on a finance lease later in our article.The salvage value: sometimes called scrap value or residual value, is the estimate of the amount the company expects to receive for the asset if sold at the end of its useful life.The cost of the asset: the amount the business paid for the asset or for the use of the asset.The only inputs required to calculate depreciation expense using the straight-line depreciation method are: It is the simplest method because it equally distributes the depreciation expense over the life of the asset. The straight-line method of depreciation is the most common method used to calculate depreciation expense. Units of production depreciation methodīelow we will describe each method and provide the formula used to calculate the periodic depreciation expense. ![]()
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