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Depreciation Expense Reasonableness CalculatorAverage Cost / Average Life

What do the numbers come to once the work is shown?

Overall straight-line depreciation expectation from average depreciable cost, fully depreciated assets and average useful life.

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  • Nothing stored or sent
  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Difference (recorded less expected)
$3,750
Recorded depreciation less the expectation
Average cost still being depreciated
$7,450,000
Expected depreciation
$931,250
Drawn to one scale
Average cost still being depreciated$7,450,000
Expected depreciation$931,250
Recorded amount$935,000
Difference (recorded less expected)$3,750
All results
MeasureResult
Average cost still being depreciated$7,450,000
Expected depreciation$931,250
Recorded amount$935,000
Difference (recorded less expected)$3,750
Difference as % of expected0.40%
InvestigateNo: within the threshold
Implied average life7.97
How this was worked out
Work shownrecomputed as you type
Base = (opening + closing depreciable cost) / 2 - fully depreciated cost
Expected depreciation = base / average useful life
Implied life = base / recorded depreciation

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Base = (opening + closing depreciable cost) / 2 - fully depreciated cost
  • Expected depreciation = base / average useful life
  • Implied life = base / recorded depreciation

How it works

An overall depreciation test checks the expense against the asset base and the entity's policy lives. It works best class by class, since buildings, equipment and vehicles carry different lives. Land is not depreciated, so leave it out of cost.

Fully depreciated assets still in use inflate cost without adding expense, so remove them. A half-year convention matches the averaging here; other conventions or large additions late in the year need a monthly base.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Does this work for accelerated methods?

Not well. Use it for straight-line classes and recompute accelerated classes from the asset register.

What does a short implied life mean?

Recorded expense is high for the base: look for impairments booked as depreciation, life changes or duplicate assets.

Should salvage value be removed?

Yes, if policy uses salvage values. Enter cost net of salvage.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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