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EXHIBIT A
STRAIGHT LINE
DEPRECIATION PLAN
Assume:
New public works 10 ton dump truck bought beginning of fiscal year
Cost of truck: $58,000
Estimated useful life: 7 years
Estimated salvage value and
disposal cost: $10,000
Yearly depreciation charge equals
Yearly depreciation charge = $6,857
Cost less salvage and disposal costs
Estimated Life
$58,000C$10,000
7 years
EXHIBIT B
SERVICE TIME DEPRECIATION
ACCELERATED DEPRECIATION
The annual depreciation charge is dependent upon the amount of use of the asset during a year, as
measured in hours operated, miles driven or another appropriate measure.
Assume:
New public works 10 ton dump truck bought at beginning of fiscal year
Cost of truck: $58,000
Estimated useful life: 100,000 miles
Estimated salvage value
and disposal costs: $10,000
Cost less salvage and disposal costs
Estimated life
$58,000C$10,000
100,000 miles
= $.48 per mile driven
In the current year, the assumption is that the truck will be driven 18,000 miles. The depreciation charge
would be $8,640.
XII-21