The straight line method of calculating depreciation assumes that the value of an asset drops linearly and is the most common method of calculating depreciation in the UK. In our example, we will assume that a company has bought a machine which cost £50,000, has a salvage value of £6,000 and an expected useful life of 10 years. The expected useful life is an estimate of the economic life of the machine while the salvage value is an estimate of the resale value of the machine at the end of its economic life. We can build a depreciation schedule to show the value of the asset over its useful life – this is reflected by the net carrying value column.
How To Calculate Depreciation Using The Reducing Balance Method In Excel:
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Depreciation Formula: (3:32)
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