The document discusses depreciation of landscape equipment and vehicles for accounting purposes. It provides examples of how to calculate annual depreciation using the formula of new price minus salvage value divided by total useful life in years. A zero turn mower purchased for $4,500 in 2009 would be worth $3,892.86 in 2011 after depreciating $607.14 per year over its 7 year life. A used truck purchased for $7,500 in 2008 would be worth $4,700 in 2010 after depreciating over its 5 year life with a $500 salvage value.

1. Landscape Depreciation Plant: Saucer Magnolia Term: Depreciation

2. 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

3. Depreciation The amount or percentage by which something decreases in value over time

4. 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

5. 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.

6. 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.

7. 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

8. 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

9. 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.

10. 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.

11. Answer You should have gotten $4,700.