1. LESSON 18-2 Calculating Depreciation Expense
5/28/2018
LESSON 18-2
Calculating Depreciation Expense

2. STRAIGHT-LINE DEPRECIATION
page 538
Calculating Annual Depreciation Expense
1. Subtract the asset’s estimated salvage value from the original cost.
2. Divide the estimated total depreciation expense by the years of estimated useful life.
Estimated Salvage Value
Original Cost
Estimated Total Depreciation Expense = –
$3,250.00 –
$250.00 =
$3,000.00 1
Annual Depreciation Expense =
Years of Estimated Useful Life ÷
Estimated Total Depreciation Expense
$3,000.00 ÷ 5 =
$600.00 2
LESSON 18-2

3. CALCULATING DEPRECIATION EXPENSE FOR PART OF A YEAR
page 539
Calculating Partial Year’s Depreciation Expense
1. Divide the annual depreciation expense by 12.
2. Multiply the monthly depreciation expense by the number of months the plant asset is used in a year.
Months in a Year
Annual Depreciation Expense
Monthly Depreciation Expense = ÷
$600.00 ÷ 12 =
$50.00 1
Partial Year’s Depreciation Expense =
Number of Months Asset Is Used ×
Monthly Depreciation Expense
$50.00 × 5 =
$250.00 2
LESSON 18-2

4. CALCULATING ACCUMULATED DEPRECIATION
page 540
20X3 Depreciation Expense
20X2 Accumulated Depreciation
20X3 Accumulated Depreciation = +
$1,200.00 +
$600.00 =
$1,800.00
LESSON 18-2

5. CALCULATING BOOK VALUE
page 540
Accumulated Depreciation
Original Cost
Ending Book Value = –
$3,250.00 –
$1,800.00 =
$1,450.00
Annual Depreciation
Beginning Book Value
Ending Book Value = –
$2,050.00 –
$600.00 =
$1,450.00
LESSON 18-2