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CapEx and Depreciation

Henry Kusuma's Profile

Hello. First of all sorry for my bad english. Here I would like to ask some help from you guys regarding capitalization cost and how to depreciation it. Lets say, company A have an asset with 5 years useful lives and already two years depreciated. In mid of third year, company A decided to improve the asset and estimate that assets can have another one useful lives. The question is how to calculate this depreciation cost? Should company A calculate deprecatiation from first year (total 6 years) or just 4 years? Some source of textbook or journal regard this problem would help as I tried and can't find any and I will consider to buy. Thank you.

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

You base your asset value and depreciation life based on the CURRENT information. Use the PROSPECTIVE (going forward) view. No matter what you did in the past, use the best information you have now.
Current book Value + improvement cost over remaining useful life.

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