How to Compute Partial Year Depreciation

In this video, I teach you how to compute partial-year depreciation. We'll navigate through the details of recording depreciation for an asset that is either acquired or disposed of within an accounting period.

We begin by illustrating a scenario where a machine is purchased and placed in service on September 1, with the annual accounting period ending on December 31. Given that the machine is used for only four months within the accounting period, we need to calculate four months' worth of depreciation.

Using the straight-line method, we demonstrate how to calculate the first year's depreciation. This involves subtracting the salvage value from the machine's cost, dividing by the useful life, and finally multiplying by the fraction of the year the asset was in service.

Next, we take this example further and assume the machine is sold five years later on August 1. We'll walk you through the process of computing the seven months' depreciation for that year before the sale.

By the end of the video, you'll be well-equipped to handle any partial-year depreciation problems that come your way in your accounting studies or practice.

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Jonathan M. Wild

#accounting #accountingstudent #accountingtutorial #depreciation

[sullivannix]

Thank you for clearly answering my specific question!