How is Aircraft Depreciation Calculated?

Depreciation is the loss in value of the aircraft, similar to the depreciation of a car. For aircraft, depreciation is caused by a variety of factors, including everyday wear and tear on the aircraft, its age, and even market fluctuations. Depreciation on an aircraft can often be claimed as a tax deduction. Depreciation is usually calculated at Annual Depreciation Expense = (Cost of Asset – Salvage Value)/Estimate Useful Life, but aircraft can be more complicated because different parts of the aircraft depreciate at different rates and need to be calculated separately. For example, the engine may have an estimated useful life of 10 years while other parts may have an estimated useful life of 25 years.

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