- 1). Determine the cost of the item to be depreciated. For example, a desk used in a home office costs $800.
- 2). Determine how long the item will be in use for. For example, the desk has a useful life of five years.
- 3). Determine the resale price of the item to be depreciated, then deduct that amount from the original purchase price. For example, the desk will be resold for $150 at the end of five years, so $800 minus $150 equals $650. This price adjusted for resale, is the net amount.
- 4). Divide the net amount of the item by the number of years it is to be in use for. The desk has an adjusted value of $650, so divide that by five years and you get a yearly net depreciated value of $130.
- 5). Divide the yearly adjusted depreciating amount by the total net amount to arrive at the percentage of net depreciation. Continuing the example; the yearly depreciated amount for the desk is $130. Divide this by $650 and the result is 0.2 or 20 percent. So the percentage of depreciation every year for the desk that lasts five years is 20 percent.
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