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1 12 Landscape Equipment Depreciation
 

1 12 Landscape Equipment Depreciation

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    1 12 Landscape Equipment Depreciation 1 12 Landscape Equipment Depreciation Presentation Transcript

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