Calculation
The formula for calculating depreciation uses a looking forward approach and determines depreciation based on the remaining useful life in order to spread depreciation out evenly over an assets life taking into consideration changes in value or life. Depreciation is calculated for each payment. The two depreciation methods are as follows.
• Straight Line
Depreciation Expense = Asset Cost - Accumulated Depreciation / Remaining useful life in months * Depreciation Period.
• Salvage Value
Depreciation Expense = Asset Cost – Salvage Value – Accumulated Depreciation / Remaining useful life in months * Depreciation Period.
Business Rules