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April 28, 2021 at 12:43 pm
Hi John, thank you very much for explaining so beautifully the concept of straight-line depreciation. Let’s say that the organisation purchased a new fixed asset, and we do not know the residual value yet. So, the depreciation will be calculated based on the costs divided by the number of years of the asset’s life. By the end of the assets life (5th year) we plan to sell the asset, can I consider this as a residual value and reduce it from the depreciation calculation? How does it work? Could you please explain it?
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