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so now you probably know the difference between depreciation amortization and depletion we're now going to talk about how to calculate the depreciation expense using either the straight-line method or the declining balance method and they're both appropriate methods to use for tangible capital assets like equipment or cars or plants so before we begin actually calculate that depreciation expense let's go ahead and talk about three things first you're going to need and those are your cost your solid value and your useful life so first off the cost is all the costs to get the acid ready for its intended use what does that mean well it means that if you have certain expenses like transfer taxes or legal fees to get maybe the the the building in your name or to transfer the title or let's say maybe freight expenses to ship a piece of equipment you can capitalize all of those costs to the acid to get it's it's it's full cost so capitalized just means you can add it to the cost so let's say our cost is I don't know fifty thousand and then each of these things are ten thousand dollars well you're gonna add all those up and then you are going to get your cost which is $80,000 and that's going to be your your capitalized cost that you will have on your balance sheets for your your asset next off you're going to need your I guess I should get rid of that it's kind of getting in the way of the second one you should have the salvage value which is the value at the end of the useful life so when you dispose of the asset you have an idea as to how much the the asset is going to be worth and finally the useful life is different from the life of the asset the useful life it just means how long how long is it going to provide your your company with benefit because let's say that I let's say it becomes obsolete after 15 years and even though it becomes obsolete it's probably going to exist or function for 30 years well since it's only going to benefit your company for 15 years you're going to use the useful life you always use the useful life so you need to come up with these three things and they're usually given and a question that's on your test or exam or whatever next up let's talk about straight-line depreciation as we've now finished that little introduction part so straight-line depreciation let's use an example let's say we have a piece of equipment for two hundred and fifty thousand dollars the salvage value is fifty thousand dollars I should say if there's no salvage value then you can treat it as $0 as of course an unknown is usually treated as zero and let's say the useful useful life is 20 years that way we get an...