Project Costs - Depreciation – ARE 5.0 Community

Question on depreciation value.. can you calculate depreciation value of say a mechanical system WITHOUT knowing the salvage value?

Based on the NCARB 5.0 Handbook, in order to calculate depreciation value, you would need to know the initial cost of the system, salvage value and expected useful life. The calculation in the handbook is: INITIAL - SALVAGE / EXPECTED USEFUL LIFE = DEPRECIATION.

If you do not know the salvage value would it just be initial/expected useful life = depreciation?

Related, do you need to factor in maintenance costs over time to calculate depreciation?

Michael Weber February 10, 2020 08:37

The calculation requires knowing the salvage value or being able to solve for the salvage value..

The calculation calls for expected years of service life. It doesn’t mention maintenance costs.
https://www.google.com/amp/s/m.wikihow.com/Calculate-Depreciation-on-Fixed-Assets%3famp=1

Project Costs - Depreciation

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