Finance Notes

Depreciation (Amortisation)

At what rate should a company's asset be written off during its life?

Insert calculator here.

Constant %Straight line depreciation
 NBV OriginalResidualEstimatedDepreciationleft
 afterCost ofValue ofEstimatedat 
Year%DepreciationDepreciationAssetLifeEnd  
 ££yearspa£
0  £200,000.00£200,000.00 £10,000.0010.00£19,000.00£10,000.00
120£40,000.00£160,000.00 £200,000.00£60,000.007.00£20,000.00£60,000.00
220£32,000.00£128,000.00  
320£25,600.00£102,400.00  
420£20,480.00£81,920.00  
520£16,384.00£65,536.00  
620£13,107.20£52,428.80  
720£10,485.76£41,943.04  
820£8,388.61£33,554.43  
920£6,710.89£26,843.55  
1020£5,368.71£21,474.84  
Original cost of asset = purchase price plus capitalised installation costs.
Residual value of asset = what you think it will be worth at end after dismantling costs.

Used by UK Inland Revenue for corporation tax.
Use the same percentage as the Inland Revenue.
NBV = Net Book Value.

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© 2001. Copyright Sue Nethercott.