Business and Industry

How do you calculate book value of assets?

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Wiki User
2008-12-05 07:12:28

Alright, here is what u do !!! Lets say u have an asset that

cost $10,000 and it falls under a 5 Years MACRS Depreciation

allowance of 20% on the first year, 32 % on the second year, 19% on

the third year, 12 % on the forth year and 11% on year five. In

case u have a straight line depreciation, u use the same percentage

every year.

For year 1, you would have .20(10,000) = 2,000

For year 2 , you would have .32(10,000) = 3,200

For year 3, you would have .19(10,000) = 1,900

For year 4, you would have .12(10,000) = 1,200

and for year 5, you would have .11(10,000) = 1,100

After finding the depreciation for each year, u only have to

subtract them from the initial price of the asset and that will

give u the book value of the asset.

10,000 - 2,000 = 8,000 (book value after year 1)

8,000 - 3,200 = 4,800 (book value after year 2)

4,800 - 1,900 = 2,900 (book value after year 3)

2,900 - 1,200 = 1,700 (book value after year 4)

1,700 - 1,100 = 600 (book value after year 5)

600 will be your book value for the asset after a 5 years

depreciation...

Hope it helped

DangLEO


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