Straight-Line Depreciation (DEPRECIATE)
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Calculate the straight-line depreciation of an asset over time. |
Depreciation is a non-cash expense that represents the need to replace assets eventually as they wear out. Different types of assets have different rates at which they lose value. This decline in value is not always linear, because some assets lose value faster earlier in their life, and some assets hold most of their value early but then lose value faster later on. Some assets have residual value at the end of their useful life, called salvage value.
Unless otherwise stated, the fiscal year for a company is the calendar year.
The useful life of the asset is estimated to be N years. The depreciation amount in the first year is adjusted if the asset is purchased in the middle of the year.
The Book Value for year t is BVt , and it can not be less than the Salvage Value S.
- syse.depreciate(cost, salvage, life)
Calculate the straight-line depreciation of an asset over time.
- Parameters:
cost – initial cost of the asset
salvage – salvage value of the asset at the end of its useful life
life – life of the asset in years
- Returns:
depreciation amount
- Return type:
float
Note
- The depreciation amount for each full year is the same amount:
the original value of the asset B minus the salvage value S all divided by the number of years N
Examples:
- A company purchased a machine for $100,000 with an estimated salvage value of $10,000 after 5 years::
cost = 100000 salvage = 10000 life = 5 syse.depreciate(cost, salvage, life) print(“The straight-line depreciation for the machine is ${} per year.”.format(depreciate)) Output = The straight-line depreciation for the machine is $18,000 per year.