depreciation methods
DEPERIATION COST(DC)=OC-SV
1 STRAIGHT LINE METHOD (SLM)
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IT PROVIDES UNIFORM OR EQUAL DE/Y *
DEP EXP(DE)=DC/LIFE *
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|YEAR | DEPEXP | ACCDEP |BV |
|------|-----------|----------------------------|---------------------|
|1 | DE | DE |OC-this year ACCDEP |
|------|-----------|----------------------------|---------------------|
|2 | DE |this year DE + last year AD |OC-this year ACCDEP |
|------|-----------|----------------------------|---------------------|
|3 | DE/* |DC |SV |
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2 UNITS OF PRODUCTION METHOD (UPM)
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DEPN CPMPUTATION BASED ON USAGE RATE *
The dep exp may vary depend on the asset usase in each year *
ALSO CALLED ACTIVITY BESED NETHOD *
DEP RATE(DR)=DC/CAPACITY(/hr) *
DE/Y=DR*ANNUAL USAGE OF THE YEAR(given) *
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| YEAR | DR |USEL| DE | ACCDEP |BV |
| ------|-----|----|---------|-----------------------------|-----------|
| 1 |DR | UL |DR*ZSYUL | DE |OC-t AD |
| ------|-----|----|---------|-----------------------------|-----------|
| 2 | DR | UL |DR*ZSYUL | this year DE + last year AD |OC-t AD |
| ------|-----|----|---------|------------------|----------|-----------|
| 3 | DR/* | UL |DR*ZSYUL | DC |SV |
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3 DOUBLE DECLING BALANCE METHOD(DDBM)
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IT BASED ON PAST OF TIME *
DR=2*(100/LIFE)% *
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| YEAR | BCB |DR | DE | ACCDEP |BVE |
| ------|-------------|----|---------|---------------------------|---------|
| 1 |OC | DR | OC*DR |DE |OC-AD |
| ------|-------------|----|---------|---------------------------|---------|
| 2 |LAST YEAR BVE| DR | BVB*DR |this year DE + last year AD|OC-AD |
| ------|-------------|----|---------|---------------------------|---------|
| 3 |LAST YEAR BVE| DR | BVB*DR | DC |SV |
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4 SUM OF THE YEAR DIGITS METHOD(SYDM)
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it is beased on passage time *
DR=2*(100/LIFE)% *
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N=n(n+1)/2 when n is life
*fraction Y1=life/N*
Y2=(life-1)/N
Y3=(life-2)/N
Yk=(life-(k-1))/N
for ex if the life is 5
N=5(5+1)/2=15
y1=5/15
y2=4/15
y3=3/15
y4=2/15
y5=1/15
DE=DC*YEARLY FRACTION
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| YEAR | FRACTION | DE | ACCDEP |BV |
| ------|----------|---------|-----------------------------|-----------|
| 1 |Y1 |Y1*DC | DE |OC-AD |
| ------|----------|---------|-----------------------------|-----------|
| 2 |Y2 |Y2*DC | this year DE + last year AD |OC-AD |
| ------|----------|---------|-----------------------------|-----------|
| 3 |Y3 |Y3*DC | DC |SV |
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