Depreciation book value after

Possible numerators include the gross income net pretax income net after-tax income gross profit, ie, gross income minus book depreciation cash flow or net income. An average return value is selected by defining a typical or mature proof year as the basis of calculation. The denominator can be the original total investment, depreciated book-value investment, lifetime averaged investment, or fixed capital investment. 

The determination of the present value for the depreciation plans is one of the best ways of comparing depreciation plans. In calculating the present value it will be assumed that depreciation expenses remain in the company and effectively reduce income taxes. If the income tax rate on earnings is 48%, then the amount of income tax saved when depreciation expenses are increased by 100 is 48. Therefore, the net savings of including depreciation as an expense is 48% of all depreciation. If the net salvage value is less than the book value after depreciation, the difference is an income and is subject to taxation. Since the amount will be the same for each of the depreciation schemes, it will not be considered in comparing the different methods. 

The annual return may be the gross income, net pre-tax income, net after-tax income, cash flow, or profit. These may be calculated for one particular year or as an average over the project life. Investment may be the original total investment, depreciated book-value investment, lifetime average investment, fixed capital investment, or equity investment. The investment includes working capital and sometimes capitalized expenses such as interest on capital during construction. 

The rate of return is often calculated for the anticipated best year of the project the year in which the net cash flow is greatest. It can also be based on the book value of the investment, the investment after allowing for depreciation. Simple rate of return calculations take no account of the time value of money. 

The original cost of a property is 30,000, and it is depreciated by a 6 percent sinking-fund method. What is the annual depreciation charge if the book value of the property after 10 years is the same as if it had been depreciated at 2500/year by the straight-line method ... 

The book value of the asset after m years of depreciation, R , is... 

Plant and equipment expenditures 50% of 10th year Sales, 2/3 spent evenly in 2 years prior to product launch. Remainder spent evenly over years 2 to 10 after product launch. 240/. of 5th year sales, spent evenly 4, 3, and 2 years prior to market launch, (investment depreciates over time and remaining book value is written off in the last year of analysis.) ... 

Book value refers to the end-of-the-year value of capital assets after depreciation expenses. Strict accounting convention determine what kinds of investments create a capital asset. R D, for example, is not recorded as an investment but is fully expensed in the year in which expenditures are made. This accounting convention required since 1975 by the Federal Accounting Standards Board, is equivalent to depreciating die investment 100 percent in die year it is made. 

Book value The current values of capital assets claimed by a company in its financial statements after depreciation expenses. Strict accounting conventions determine what kinds of investments create a capital asset. 

Note that after 6 years, when the plant is supposedly valueless, it still has a book value of 527,000. The double declining balance can never fully depreciate a plant that has zero salvage value, just as the frog that jumps a third of the way to the well with each jump will never reach the well. 

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