Maths Dictionary · SS 3
Depreciation
Simple meaning
The fall in value of something, like a car or machine, as it gets older.
Example
A ₦800,000 machine losing 20% a year is worth ₦512,000 after 2 years.
See it
From the Depreciation lesson. Try moving things around.
Reducing balance (value now)Straight line: 20% of the original every year
Principal P₦2,000,000
Rate of loss r20%
Years n2
V = ₦2,000,000 × 0.82 = ₦1,280,000
Year 2: ₦1,600,000 − ₦320,000 (20% of last year's value, not of ₦2,000,000)
Total depreciation = ₦2,000,000 − ₦1,280,000 = ₦720,000 · straight line (20% of the original each year) would say ₦800,000
Multiplier 1 − 20/100 = 0.8 · amounts rounded to the nearest kobo