Straight-Line, Half-Year Example
For a $14,000 truck placed in service on March 16, 2007, with an estimated life of 6 years and a salvage value of $2,000, the depreciation calculation for the straight-line method looks like this:
|
|
Original cost |
$14,000 |
|
- |
Salvage value |
2,000 |
|
|
Adjusted basis |
$12,000 |
|
Adjusted basis
|
= |
$12,000
|
= $2,000 |
Yearly depreciation is $2,000 for the years 2008 through 2012. Since the truck was placed in service in March, the 2007 depreciation using the half-year convention is one-half of the annual depreciation, or $1,000. The depreciation for the last year is also one-half of the annual depreciation, or $1,000.