Book Depreciation

Book depreciation refers to the amount of depreciation calculated for non-current assets that is recorded in an entity’s general ledgers and presented on the entity’s statement of financial position. There are two ways to calculate book depreciation, the first one is the straight-line depreciation method in which the salvage value of a non-current asset is subtracted from its cost and the remaining amount is divided by the estimated useful life of an asset. The other method to calculate depreciation is the reducing balance method in which the depreciation is calculated by applying a standard depreciation rate on the assets net book value. The net book value of an assets is obtained by deducting depreciation charged on an asset in previous years from its purchase price/ cost.

 

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