Help with depreciation function

[Dianne]

How do you know what amounts to enter into the DB
function for Salvage and Life?

 

[Jane Graves]

Life is how long you want to depreciate the item for,
based on how long you think it will last in a useful
form. Salvage is based on your estimates of how much you
think the item will be worth at the end of the item's
life -- ie, a new car can be sold after 4 years of use,
but it's not worth as much as it was when it was new.

Jane

 

[Felipe]

Dianne,

I took this from the excel help for DB function:

DB(cost,salvage,life,period,month)

Cost is the initial cost of the asset.

Salvage is the value at the end of the depreciation
(sometimes called the salvage value of the asset).

Life is the number of periods over which the asset is
being depreciated (sometimes called the useful life of the
asset).

Period is the period for which you want to calculate the
depreciation. Period must use the same units as life.

Month is the number of months in the first year. If
month is omitted, it is assumed to be 12.


Do you need further information?

 

[ozzie]

In the US, the answer depends on what depreciation you are
reporting - financial or tax. They are two different
creatures. Depending on the assets, the numbers can be the
same but its not likely.

For the financial reporting your company should have a
policy on asset life depending on asset class. Computers
and like could be 3 years, autos could be 2 years,
furniture and fixtures could be 5 years. For the tax
depreciation, the US government provides the dollar
limits, asset life, the specifics,

Talk to your certified accountant.