HP 12C Instruction Manual page 2

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HP 12C Depreciation
Depreciation
Depreciation (Latin 'Depretium': 'decline in price' or 'value') is an accounting term that may be defined as the permanent
and continuing diminution in the quality, quantity or the value of an asset over time. This is due to many reasons, from
deterioration and obsolescence to impending retirement. It applies particularly to physical assets like equipment and
structures. In industry, for accounting purposes, depreciation is also a method of deducting the cost of business property
related to capital assets as they wear out, lose value, or become obsolete in order to recover their cost as a business
expense. A capital asset can be a piece of equipment, a building or a vehicle expected to be used for several years. The
purchase price of the asset on the purchase date is called book value.
Depreciation on the HP12C
There are mathematical tools that calculate the depreciation of assets, and the HP12C has functions that allow three
different approaches: straight-line depreciation (V), depreciation using declining balance (#) and depreciation
using sum of the years digits (Ý). These functions can be used to directly calculate depreciation or as part of a
program or more complex calculations. The expressions used by the HP12C to calculate depreciation with these
functions are:
Straight Line
−
SBV SAL
=
DPN
J
L
where:
L = asset's useful life expectancy;
SBV = starting book value;
SAL = salvage value;
FACT = declining balance factor expressed as a percentage;
j = period number;
DPN = depreciation expense during period j;
j
RDV = remaining depreciable value at the end of period j;
j
RBV = remaining book value;
j
= number of months in the partial first year;
Y
1
The HP12C calculates depreciation with either of these three methods by using TVM registers w, ¼, $ and M to
hold the necessary data, as shown below:
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= =
| j 1 , , 2 , L DPN
L
J
RBV
Register
salvage value of the asset
M
original cost of the asset
$
expected useful life of the asset (years)
w
¼ declining-balance factor (# only)
Declining Balance
FACT
=
RBV | j 1 , 2 ,
−
J 1
100 L
RDV
RDV
where
= −
RBV DPN where
−1
j j j
Contents
- 2 -
Sum Of the Years Digits
(
+
W 1
=
, L SOYD
L
K
= −
RDV DPN
−1
j j
= −
SBV SAL
0
RBV =
SBV
0
HP 12C Depreciation - Version 1.0
)( )
+
W 2 F
2
Figure 1
j