10 - Depreciation, Amortization, & Fixed Assets

Today we tackle depreciation and amortization, and we discuss fixed assets.

Facts for following examples: Asset cost of $85,000, salvage value of $10,000, and a useful life of 5 years.

Note: "Depr" represents depreciation expense, "A/D" represents accumulated depreciation, and "B/V" represents book value at the end of the year.

I tried to align the columns as best as I could, but they appear differently on different platforms.

Assuming the asset was put into service January 1 of year 1 and utilizing the straight line method:

Year Factor Depr A/D B/V

1 0.2 15,000 15,000 70,000

2 0.2 15,000 30,000 55,000

3 0.2 15,000 45,000 40,000

4 0.2 15,000 60,000 25,000

5 0.2 15,000 75,000 10,000

Assuming the asset was put into service October 1 of year 1 and utilizing the straight line method:

Year Factor Depr A/D B/V

1 0.2 3,250 3,750 81,250

2 0.2 15,000 18,750 66,250

3 0.2 15,000 33,750 51,250

4 0.2 15,000 48,750 36,250

5 0.2 15,000 63,750 21,250

6 0.2 11,250 75,000 10,000

Assuming the asset was put into service January 1 of year 1 and utilizing the double declining (don't!) balance method:

Year Factor Depr A/D B/V

1 0.4 34,000 34,000 51,000

2 0.4 20,400 54,400 30,600

3 0.4 12,240 66,640 18,360

4 0.4 7,344 73,984 11,016

5 0.4 1,016 75,000 10,000

Assuming the asset was put into service January 1 of year 1 and utilizing the sum of the years' digits method:

Year Factor Depr A/D B/V

1 5/15 25,000 25,000 60,000

2 4/15 20,000 45,000 40,000

3 3/15 15,000 60,000 25,000

4 2/15 10,000 70,000 15,000

5 1/15 5,000 75,000 10,000