I need help deriving the proper PP&E schedule given the following information on.
(1) At the beginning of the year 2020, the company invests 100.000 in PP&E.
(2) Capital Expenditure Assumptions are the following: Asset Salvage Value (% of Capital Addition) is 15% and Asset Useful Life is 10 years.
This means depreciation for 2020 is (100.000-0,15*100.000)/10=8.500. So far so good.
Now assuming that in the following years the company has CAPEX of 20.000 each year. What is the depreciation in 2021 and the following years?
My conceptual problem is (given the assumption (2)), is depreciation always related to the initial investment or is it “updated” taking the yearly CAPEX into account?
Thanks a lot for your help!