How Do You Calculate Building Accumulated Depreciation?
In the world of accounting there are two different types of transactions: cash and non-cash. One of the most common non-cash transactions is depreciation. Depreciation expense is a way for accountants to value the wear and tear of an asset over time. As time progresses and the asset loses value, the accountant transfers value to what is referred to as an Accumulated Depreciation account. Determine the original cost of the building. This is the value of the building as purchased and/or all costs associated with building the facility. This is the cost of the building, not the current market value. Do not include the value of the land. Land does generally not depreciate. Let’s say the building cost is $100,000. Determine the useful life of the building. Let’s say the building is expected to be used for 20 years. Calculate Depreciation Expense. Divide the cost of the building by the useful life of the building. The calculation is $100,000 / 20 = $5,000. This means the annual Depreciation E
