Process and Plant

Process and Plant Design II

Design II

Lecture 6
Depreciation 1
 definition
Depreciation is defined as the less
in value of physical asset with use
and or with the passage of time

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 Significance

1- Determination of production cost.

2- Depreciation is an integral part of any

engineering economy analysis.

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 Classification
The common types of depreciation can be classified
as:

A. Physical Depreciation

It results in the lowering of the ability of a physical

asset. It may be due to:

1- natural causes
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B. Functional Depreciation
It results from a change in the need for the service,
and may be due to:
1- Obsolescence.
This is a less in value due to technological advance.
2-Inadequacy
This is the inability of an asset to meet the demand
placed upon it
3- Accidental Depreciation 5
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 1) The straight line model (S-L
model)
.

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 2- The sum of the year digits
model
(SYD model)
.

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The declining balance model (DB-
model)
.

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 Example
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 Solution
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