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  • Sinking Fund Depreciation Method

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    Ysabela Angela Flores
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    The document outlines a 10-year depreciation schedule for an asset with a cost basis of $10,000 and salvage value of 10% of the cost basis, or $1,000. Each year, the annual depreciation is $621, which is calculated by taking the depreciable value of $9,000 and dividing by the 10-year depreciation period. The cumulative depreciation increases each year until year 10 when it reaches $9,000, reducing the asset value to the $1,000 salvage value.

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    The document outlines a 10-year depreciation schedule for an asset with a cost basis of $10,000 and salvage value of 10% of the cost basis, or $1,000. Each year, the annual depreciation is $621, which is calculated by taking the depreciable value of $9,000 and dividing by the 10-year depreciation period. The cumulative depreciation increases each year until year 10 when it reaches $9,000, reducing the asset value to the $1,000 salvage value.

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    © All Rights Reserved
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    50 views1 page

    Sinking Fund Depreciation Method

    Uploaded by

    Ysabela Angela Flores
    The document outlines a 10-year depreciation schedule for an asset with a cost basis of $10,000 and salvage value of 10% of the cost basis, or $1,000. Each year, the annual depreciation is $621, which is calculated by taking the depreciable value of $9,000 and dividing by the 10-year depreciation period. The cumulative depreciation increases each year until year 10 when it reaches $9,000, reducing the asset value to the $1,000 salvage value.

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    © All Rights Reserved
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    Cost Basis 10,000

    Salvage Value 10% of Cost Basis 1000


    Depreciation Period 10 years
    Sinking Fund
    Depreciable Value = Cost Basis - Salvage Value 9,000
    Annual Depreciation : = ( I - S) * (i/((1+i)^N-1) Smaller than SLD but will earn interest
    i 8%
    Cumulative
    Bn, by
    Depreciation Bn, by
    n Dn subtraction of
    using future Formula
    Cum Dep
    value
    0 0 0 10000 10000
    1 621 621 9379 9379
    2 621 1292 8708 8708
    3 621 2017 7983 7983
    4 621 2799 7201 7201
    5 621 3645 6355 6355
    6 621 4558 5442 5442
    7 621 5543 4457 4457
    8 621 6608 3392 3392
    9 621 7758 2242 2242
    10 621 9000 1000 1000

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