To calculate the Diminishing Rate (DR):
DR=DVA
Where:
The diminishing rate refers to the rate at which the value of an asset decreases over time. It is calculated by dividing the total diminished value by the total age in years.
Let's assume the following values:
Using the formula:
DR=100005=2000
The Diminishing Rate is $2000 per year.
Let's assume the following values:
Using the formula:
DR=150003=5000
The Diminishing Rate is $5000 per year.