What is the dollar amount of depreciation for a short-lived item with a cost new of $5,000, actual age of 5 years, and total useful life of 20 years?

To determine the dollar amount of depreciation for a short-lived item, it's important to understand how depreciation is calculated based on its cost, actual age, and total useful life. The straight-line method is commonly used, which spreads the cost evenly over the useful life of the asset.

In this case, the item has a cost of $5,000, an actual age of 5 years, and a total useful life of 20 years. First, you would find the annual depreciation expense by dividing the cost by the total useful life:

Annual Depreciation = Cost / Total Useful Life

Annual Depreciation = $5,000 / 20 years = $250 per year

Next, to find the total depreciation for the 5 years the item has already been used, you would multiply the annual depreciation by the actual age:

Total Depreciation = Annual Depreciation × Actual Age

Total Depreciation = $250 × 5 years = $1,250

Thus, the dollar amount of depreciation for the short-lived item is $1,250, making that the correct answer. This calculation effectively captures how much value the item has lost over the years due to wear and tear, which is essential in property appraisal for accurate assessments