How To Calculate Depreciation on Computer Equipment

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Depreciation is considered the loss in value of a product or an asset over a period of time. This term is also used for computers. Computer equipment depreciates over time due to damage or because it becomes outdated and cannot function as well as new computers. There are regulations on how to calculate the depreciation of an object. A computer belongs to the listed property category. This category pertains to items that are used in homes or in businesses.

Here are the steps on how to calculate the depreciation cost for a computer:

  1. Determine the condition of your computer. The depreciation cost of a computer can also depend on the condition it is in. Your old computers can still be used for donation to computer recycling or computer disposal centers. It is important to recycle your computers in order to get rid of them instead of throwing them in the garbage. You can also donate them to auctions and sales of different computer parts.
  2. Know the price of your computer equipment. In order to calculate for the depreciation value of your computer equipment, you must first know how much your computer was worth when you first bought it. This is for computers that were bought brand new. Once you have determined the price of your computer, you can easily calculate its depreciated value.
  3. Know how many years your computer has been used. For you to calculate the depreciated value of your computer, you must also know how long it has been used. The depreciation value of computers is recomputed every year. You can round off the numbers to add the months in between years. When you know the number of years your computer has been used, you are ready to calculate the depreciation value.
  4. For the first year. For the first year, all you have to do is multiply the total cost of the computer by 20%. The value that you will get is the depreciation value. In order to get the price for a computer that has been used for 1 year, simply subtract the value that you got from the total price of the computer.
  5. For the second, third, fourth and fifth years. In calculating for the depreciation value for the succeeding years, all you have to do is substitute the percentage to the corresponding year and repeat the steps above. For the second year, use 32%; for the third year, use 19.2%; for the fourth year, use 11.52%; for the fifth year, use 11.52%. Subtract the values that you will get from the total cost of the product and you will get the price for the depreciated computer.

These are the basic steps in calculating the depreciation in value of computer equipment. There are different rules and computations regarding the depreciation of different items. For a more detailed explanation of the depreciation of different items, you can research the IRS and take a look at Section 179 to be able to understand the different factors that are considered when you are calculating for the depreciation value of an item.


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