¿Qué es la DEPRECIACION? ► METODOS de DEPRECIACION ⚠️ | Economía de la empresa 107#

Summary

The video explains depreciation—the loss of an asset’s value over time—and how companies estimate and account for it through amortization.

Depreciation and its causes

Depreciation reduces an asset’s value and useful life, potentially until it can no longer be used. The video identifies three main causes:

• Wear and tear: Use physically deteriorates an asset. For example, a vehicle’s engine, tires, and brakes wear down.
• Obsolescence: Newer or more efficient technology can make existing equipment less valuable, as can happen with computers.
• Currency devaluation: A decline in a national currency’s value relative to foreign currencies can affect the local value and replacement cost of imported assets.

The video gives cars as an example, saying they may lose around 10% of their original value each year. This is presented as a rough estimate, not an exact rule.

Amortization

To plan for replacing an asset, a company estimates its useful life and allocates its cost across that period. The video calls this process amortization and describes the annual amortization amount as a company cost.

Linear (fixed-installment) method

This method allocates the same amount of an asset’s depreciable cost to each year of its useful life. The depreciable cost is calculated by subtracting the asset’s expected residual value from its purchase cost.

• An airplane costs €200,000, has a useful life of 10 years, and has no residual value. Its annual amortization is €200,000 ÷ 10 = €20,000.
• If the airplane is expected to be worth €50,000 after 10 years, its depreciable cost is €200,000 − €50,000 = €150,000. Its annual amortization is €150,000 ÷ 10 = €15,000.

Addition or accelerated depreciation method

This method allocates a larger share of an asset’s cost to its early years, with annual charges decreasing over time. One approach described is to amortize at twice the linear rate in the first year.

For the €200,000 airplane with a 10-year useful life and no residual value, the linear rate is 10% per year. Twice that rate gives a first-year charge of €40,000. In the second year, 20% is applied to the remaining €160,000, resulting in an amortization charge of €32,000. The same approach continues on the remaining balance.

Speakers and sources

• Presenter/narrator: The host of the Economía Desde Casa channel, explaining depreciation and amortization.
• Examples mentioned: Cars, computers, imported equipment, and an airplane. No separate speakers are identified.