Depreciable Amount Formula

Depreciable Amount Formula

Depreciable amount can be calculated by the following formula. Depreciation for the year is calculated on the bases of depreciable amount.

Depreciable Amount = Cost of Asset – Residual Value

Example

Cost = 120,000

Residual Value = 40,000

Calculate Depreciable Amount

Solution

Depreciable Amount = Cost of Asset – Residual Value

=120,000-40,000

=80,000. (Depreciable Amount)

Depreciable amount is play important role for calculating the depreciation