The depreciation cost of a paper plate machine refers to the value loss determined based on the machine’s annual useful life. Depreciation is the process of allocating the cost of an asset as an expense over its useful life, either equally or in specific proportions. This calculation takes into account the machine’s wear and tear and the expiration of its economic life.
Depreciation Calculation Methods
The most commonly used method for calculating depreciation in paper plate machines is the straight-line method. To calculate depreciation using this method, the following formula is applied:
- Straight-Line Method: An equal amount of depreciation is allocated each year. In this method:
- Depreciation Amount = (Machine Cost – Salvage Value) / Machine’s Useful Life
For example:
- Machine cost: 100,000 TL
- Salvage value: 10,000 TL
- Machine’s useful life: 10 years
In this case, the depreciation amount is calculated as follows:
- Depreciation Amount = (100,000 TL – 10,000 TL) / 10 years
- Depreciation Amount = 9,000 TL (per year)
This means that the machine loses 9,000 TL in value each year, and this amount is recorded as an expense annually.
Other Methods
In addition, methods like the declining balance method can be used, which allow for faster depreciation in the earlier years of the asset’s life. This method allocates a higher depreciation expense at the beginning of the asset’s useful life and decreases the amount in subsequent years.
