| O + DV + Vr | = | o + dV₁ + V₁r |
| U | u |
which solved for V₁, the price to be paid, gives
| u | (O + DV + Vr) - o | |
| V₁ = | U | |
| d + r |
Evidently, V-V₁ is the amount of the depreciation charge. The values for D and d, as indicated in the footnote, may be substituted and the amount of V₁ determined. The process is somewhat complicated in its practical application and will not be carried further here.
4. Miscellaneous Methods
Other methods of calculating the depreciation charge are used, but they cannot be classified under any of the three groups discussed so far. They are a miscellaneous, mongrel breed, scarcely to be dignified in some instances as methods. Among these may be mentioned the following:
- (a) Maintenance Method
- (b) Replacement Method
- (c) Fifty Per Cent Method
- (d) Appraisal Method
- (e) Insurance Method
- (f) Gross Earnings Method
(a) Maintenance Method
In this case a periodic charge for depreciation is made, equal in amount to the cost of maintenance of the asset for the period. It is thus a definite but variable amount, depending upon the maintenance policy.
(b) Replacement Method