Value
Depreciation is defined as the reduction in value of an
asset over time. In this case, value reduction is due to wear and tear of an
equipment (bicycle).
a. The depreciation value would simply be the difference
in initial and salvage value divided by time in years.
Depreciation = (Initial value – Salvage value) / Number
of years
b. Substituting the given values into the equation where:
Initial value = $1200
Salvage value = $940
Number of years = 10 months = 10/12 years
Calculating:
Depreciation = ($1200 - $940) / (10/12 years)
Depreciation = $312 / year
or
<span>Depreciation = $26 / month</span>
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