Final answer:
To calculate the yearly depreciation, subtract the current value of the car from the original price and divide by the number of years. For the car bought at $30,995 and now worth $19,870 after 5 years, the annual depreciation is $2,225.
Step-by-step explanation:
The student has asked about calculating depreciation per year for a car. To find this, we need to determine the total amount that the car has depreciated over 5 years and then divide that number by 5.
First, we find the total depreciation:
Original Price - Current Value = Total Depreciation
$30,995 - $19,870 = $11,125
Next, we calculate the annual depreciation:
Total Depreciation ÷ Number of Years = Annual Depreciation
$11,125 ÷ 5 = $2,225
Therefore, the car depreciates by $2,225 per year.
Subtract the salvage value from the asset cost. Divide that number by the estimated number of hours in the asset's useful life to get the cost per hour. Multiply the number of hours (or units of production) in the asset's useful life by the cost per hour for total depreciation.
- Subtract the salvage value from the asset cost.
- Divide that number by the estimated number of hours in the asset's useful life to get the cost per hour.
- Multiply the number of hours (or units of production) in the asset's useful life by the cost per hour for total depreciation.