Generally accepted depreciation methods do not factor in the Time Value of Money, despite the concept being a core principle of financial asset valuation. By applying the concept to depreciation, Depreciable Asset Value Models can be formulated, that allow depreciation to be calculated in a manner consistent with financial theory. While the Basic Depreciable Asset Value Model formulated within has its limitations, more complex models, which factor in a greater number of variables, can be formulated using its logic.
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