1 12 Landscape Equipment Depreciation

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1 12 Landscape Equipment Depreciation

  1. 1. Landscape Depreciation Plant: Saucer Magnolia Term: Depreciation
  2. 2. Saucer Magnolia Magnolia soulangiana <ul><li>Plant type: Tree </li></ul><ul><li>USDA Hardiness Zones: 5a to 9a </li></ul><ul><li>Height & Spread: 20-25’ </li></ul><ul><li>Exposure: partial shade to full sun </li></ul><ul><li>Bloom Color: Pink, White </li></ul><ul><li>Bloom Time: Late winter, early spring </li></ul><ul><li>Growth Rate: slow </li></ul><ul><li>Landscape Uses: Espalier, Pest tolerant, Specimen </li></ul>
  3. 3. Depreciation <ul><li>The amount or percentage by which something decreases in value over time </li></ul>
  4. 4. Depreciation <ul><li>Depreciation is applied to fixed assets – not supplies or something that will be used up or sold </li></ul><ul><li>Land is an example of a fixed asset that does not depreciate – it increases in value </li></ul>
  5. 5. Landscape Equipment <ul><li>Equipment loses value over time </li></ul><ul><li>For accounting purposes: </li></ul><ul><ul><li>Landscape equipment will last 7 years </li></ul></ul><ul><ul><li>Cars & trucks will last 5 years </li></ul></ul><ul><li>The cost of the equipment is divided by its expected life to find the amount that it depreciates each year. </li></ul>
  6. 6. Salvage Value <ul><li>Equipment that is older than the set depreciation time has a value called “salvage value”. This is what it can be sold for when it is past its useful life </li></ul><ul><li>In reality – a lot of equipment is fully functional when it is older than its depreciation schedule. </li></ul><ul><li>The depreciation schedule is not like a blue book value. It doesn’t calculate what you can sell it for. It is for accounting purposes. </li></ul>
  7. 7. Example <ul><li>You purchased a 60” Toro Zero Turn in 2009 for $4,500. Its salvage value is $250 </li></ul><ul><li>Formula for yearly depreciation </li></ul><ul><ul><li>New Price – Salvage Value </li></ul></ul><ul><ul><li> Total years </li></ul></ul><ul><li>How much is it worth in 2010? </li></ul><ul><ul><li>Equipment Depreciates in 7 years </li></ul></ul><ul><ul><li>(4,500 – 250) ÷7= $607.14 </li></ul></ul><ul><ul><li>4,500 – 607.14 = $ 3,892.86 </li></ul></ul><ul><li>How much will it be worth in 2011? (2years old) </li></ul><ul><ul><li>4,500 – (2 x 607.14) = $3,285.72 </li></ul></ul>
  8. 8. How much is it worth? <ul><li>You purchased an Echo string trimmer for $350 in 2008. It’s salvage value is $15. </li></ul><ul><li>What is it valued at in 2010? </li></ul><ul><li>Formula for yearly depreciation </li></ul><ul><ul><li>New Price – Salvage Value </li></ul></ul><ul><ul><li> Total years </li></ul></ul>
  9. 9. How much is it worth? <ul><li>You purchased a used truck in 2008. It is a 2000 Ford F250 4WD. It was $25,000 new, but you paid $7,500 for it. </li></ul><ul><li>Do you use 2000 and $25,000 or 2008 and 7,500 for your calculation? </li></ul><ul><li>Answer: Use the value and age since you have owned it. </li></ul>
  10. 10. Use your values <ul><li>Depreciate your price: $7,500, less the salvage value ($500) for 5 years since it is a truck. </li></ul><ul><li>Calculate its value in 2010, show your work on the worksheet. </li></ul>
  11. 11. Answer <ul><li>You should have gotten $4,700. </li></ul>

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