Determine the asset’s cost
Estimate the asset’s useful life
Estimate the salvage value
Subtract salvage value from cost to get depreciable base
Choose a depreciation method
Straight-line method: depreciable base ÷ useful life
Declining-balance method: book value × depreciation rate
Units-of-production method: depreciable base ÷ total estimated units × units used
Record the annual depreciation expense
Subtract accumulated depreciation from the asset cost to find book value