Most of people need cars to work or travel, they purchase them with the exception that the value of cars will rise over time. However, you may realize, not like the case of homes, these expensive purchases will decrease all the time because of cars’ age, model, and distance of travel. Therefore, this is depreciation, the value of automobile goes down as time goes by due to usage. In order to help you calculate the depreciation, there are three various methods I list, such as Straight-line, units of production and Double-declinig Balance. Straight-line depreciation method
(1) Cost minus Residual value is equal Depreciable Amount. (2) The depreciable amount is divided by the asset’s useful life to calculate the annual depreciation expense.
Units-of-production method
It is used to calculate the depreciation of wasting assets. It assigns an equal of expense to each unit produced or service by the asset. It’s ideal for equipment whose activity can be measured in units of output, such as kilometers driven or hours in use.
The formula to calculate depreciation has three steps: (1) Is the same as straight-line’s first step. (2) Depreciable amount is divided by Total estimated units of production is equal depreciable amount per unit. (3) Depreciable amount per unit * units of production during the year is equal annual depreciation expense.
The formula involves using historical costs and estimated salvage values and then determining the expense for the accounting period, multiplied by the number of units produced. It’s easy to apply when assets are purchased during the year.
Double-dealing balance
It is a type of accelerated depreciation method that calculates a higher depreciation charge in the first year of an asset’s life and gradually decreases depreciation expense in the subsequent years.
No matter the age of your car, insurance will be a concern. Rates will almost always be lower for used cars than new cars, but regardless, keeping coverage costs low is a good savings strategy. The best way to do that is to keep your car insurance search as efficient as possible.
If you don’t know how to calculate depreciation, so you can compare the three different ways I have listed above. In fact, thought your can will be depreciated, it doesn't mean you can't buy car. Therefore, you should accept the vale of car will be lower and lower as time goes by.
Reference:
https://www.trustedchoice.com/insurance-articles/wheels-wings-motors/car-depreciation/
http://www.investopedia.com/ask/answers/021815/what-are-different-ways-calculate-depreciation.asp
The formula involves using historical costs and estimated salvage values and then determining the expense for the accounting period, multiplied by the number of units produced. It’s easy to apply when assets are purchased during the year.
Double-dealing balance
It is a type of accelerated depreciation method that calculates a higher depreciation charge in the first year of an asset’s life and gradually decreases depreciation expense in the subsequent years.
No matter the age of your car, insurance will be a concern. Rates will almost always be lower for used cars than new cars, but regardless, keeping coverage costs low is a good savings strategy. The best way to do that is to keep your car insurance search as efficient as possible.
If you don’t know how to calculate depreciation, so you can compare the three different ways I have listed above. In fact, thought your can will be depreciated, it doesn't mean you can't buy car. Therefore, you should accept the vale of car will be lower and lower as time goes by.
Reference:
https://www.trustedchoice.com/insurance-articles/wheels-wings-motors/car-depreciation/
http://www.investopedia.com/ask/answers/021815/what-are-different-ways-calculate-depreciation.asp
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