The value after 2 years:
depreciation rate = 1 - 0.04 = 0.96 per year
formula: current value X depreciation rate = future depreciation value
First year: 230,000 X 0.96= 220800
Second year: 220,800 X 0.96 = 211,968
Third year: 211,968 X 0.96 = 203489.28
Depreciation is an accounting technique for spreading out the expense of a tangible item over the course of its useful life. How much of an asset's value has been used is shown through depreciation. It enables businesses to purchase assets over a predetermined length of time and generate income from those assets.
Depreciation is the decrease in the value of an item brought on by elements like use and age. Assets with an acquired value of $5,000 or more are depreciated by the institution.
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