Engineering Economy, 5/e

Leland Blank, Texas A&M University
Anthony Tarquin, University of Texas - El Paso

Depreciation Methods

Learning Objectives

Purpose: Use classical and U.S. government-approved methods to reduce the value of the capital investment in an asset or natural resource.

This chapter will help you:

Understand and use the basic terminology of depreciation.

Apply the straight line model of depreciation.

Apply the declining balance and double declining balance models of depreciation.

Apply the Modified Accelerated Cost Recovery System (MACRS) of depreciation.

Select the recovery period of an asset for MACRS depreciation.

Utilize the cost depletion and percentage depletion methods for natural resource investments.

Apply the sum-of-year digits method of depreciation.

Determine when to switch from one depreciation model to another.

Compute MACRS depreciation rates using depreciation model switching.

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