What is Depreciable Cost?
Depreciable cost, also known as depreciable basis or depreciable amount, refers to the portion of an asset's cost that can be depreciated over its useful life for tax or accounting purposes. It represents the initial cost of the asset minus its salvage value or residual value. This concept is crucial in determining the annual depreciation expense of an asset, which is the amount by which the asset's value is reduced each year due to wear and tear, obsolescence, or usage.
The depreciable cost is calculated to ensure that an asset's cost is allocated over its useful life in a systematic and rational manner. This allows businesses to match the expense of using the asset with the revenues it generates over time, thereby reflecting a more accurate picture of the asset's consumption or usage.
How to Calculate Depreciable Cost of Asset?
Depreciable Cost of Asset calculator uses Depreciable Cost = Purchase Cost-Salvage Value to calculate the Depreciable Cost, The Depreciable Cost of Asset is the cost basis of the depreciation expense following a capital expenditure. Depreciable Cost is denoted by DC symbol.
How to calculate Depreciable Cost of Asset using this online calculator? To use this online calculator for Depreciable Cost of Asset, enter Purchase Cost (PC) & Salvage Value (SV) and hit the calculate button. Here is how the Depreciable Cost of Asset calculation can be explained with given input values -> 365000 = 410000-45000.