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shopgirl
11-21-2005, 07:22 PM
I forgot how to calculate depreciation... can someone please help me? I purchased a computer in 2002 for $900. What is the residual value?

SiliconValleyian
12-14-2005, 03:48 PM
Hi

What you need to do is take the amount you bought the computer for($900) and subtract the salvage value of the computer(the value if you were to get rid of it) Now, divide that by the estimated life of the asset in years. Example: You paid $900 for the computer in 2002, lets say that the estiamted salvage value is $300, that leaves us with $600. Now lets say that the computer will last for 5 years( I believe 5 years is the maximum estimated life for computers) Now divide $600 by 5 to get $120 yearly depreciation deduction.

I hope this helps.

Did you take the depreciation deduction in 2002,2003,2004 for the computer?

pahagwl
02-24-2014, 08:27 AM
In order to calculate the amount of depreciation by the straight line method, you need to first estimate. the life of the asset and its residual value at the end of that life. After that, you need to reduce the actual cost by the residual value in order to know the effective cost of the asset. Then you need to divide the effective cost with the number of years of the life of your asset, in order to arrive at the amount of asset which you will be consuming each year.

speeduser
12-18-2020, 04:56 AM
Back to the drawing boards right now. This is one of the most basic formula an accountant should know. - Phillip Elden (https://twitter.com/phillip_elden)