Example 4:

Fair Value = 2,500,000

Residual Value = 500,000

Useful life = 10 years  Straight line depreciation rate = 1/10 = 10% per year

 Depreciation for December 2020

2,500,000 x 10% x 3/12 = 62,500

 Depreciation for December 2021

(2,500,000 – 62,500) x 10% x 12/12 = 243,750

Fair Value at the

Year Fair Value Depreciation Rate Depreciation
year end
1 2,500,000 10% 62,500 1,993,163
2 2,437,500 10% 243,750 1,749,413
3 2,193,750 10% 219,375 1.530,038
4 1,974,375 10% 197,438 1,332,600
5 1,776,937 10% 177,694 1,154,906
6 1,599,243 10% 159,924 994,982
7 1,439,319 10% 143,932 851,050
8 1,295,387 10% 129, 539 721,511
9 1,165,848 10% 116,585 604,926
10 1,049,263 10% 104,926 500,000