Depreciation Question

[neomastino]

Can anyone provide the methodology regarding how to calculate a depreciation rate based upon a 30 year life with a 20% floor (straight line)

thank you in advance for any help that can be provided.


Mike

 

[og954]

By 20% floor (salvage value), I am assuming that is the price you are going to sell the asset for at the end of it's useful life.

So the first step would be to deduct the 20% from the cost basis of the asset. So lets assume that the cost basis is 25,000. We just subtract the salvage value and get 20,000 that we have to depreciate over 30 years. Then you simply take that 20k value and divide by the number of years that you are going to be using the asset for. So in this case it would be 667.00 per year.

Here is the formula.

(Cost Basis-Salvage Value) divided by (number of useful years)