# How to Calculate Depreciation on an LCD TV

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Electronic devices like LCD TVs lose value as they age.
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Depreciation is a measure of the value lost by an asset in each period of use. In the case of electronics such as an LCD TV, the process is fairly intuitive. Every TV owner knows that the device has a relatively short useful life, loses resale value every year and ultimately has to be scrapped. Exact depreciation calculations, however, can be very useful for tax purposes, in the event that you want to resell the device or just for your own record-keeping. These same calculations can be used for a variety of electronics, including plasma screens, 3D TVs and even computers.

## Straight Line Depreciation

Straight line depreciation is the easiest method for calculating depreciation and assumes that a device depreciates evenly over its useful life. The formula for this type of depreciation is simply the initial value of the asset minus its residual value divided by the number of years it is expected to be in use. As an example, assume a \$2,700 LCD TV has a useful life of 5 years and can be recycled for \$200 dollars at the end of those five years. The value to be depreciated is then \$2,500 dollars (2,700 - 200) and the annual depreciation is \$500 (2,500 / 5).

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## Reducing Balance Depreciation

Reducing balance depreciation calculates depreciation by a constant rate while taking the reduced value of the asset into account. In the case of a \$2,700 LCD TV with a \$200 dollar scrap value, the depreciating amount is considered to be \$2,500. Each year, the asset depreciates by a fixed percentage over 5 years. If, for example, you use 30 percent, the first year depreciation would be \$750 (2,500 x .30). In the second year, the depreciation is calculated over the reduced value of \$1,750, since the TV is now worth less. Second year depreciation would be \$525 (1,750 x .30) and so forth for all five years. In the final year, the depreciation amount is whatever is left above the \$200 scrap value.