Last updated: Jul 30, 2024

Appliance Depreciation Calculator

Q: How do you calculate depreciation on appliances?

To calculate depreciation on appliances: Multiply the age of the appliance by the replacement cash value . Multiply this product with the depreciation rate to obtain the depreciated value of appliances. Subtract the depreciation value from the replacement cash value to find out the actual cash value of the appliance.

Q: What is the difference between replacement cost and actual cash value?

The replacement cash value is the current cost of the product in the market , i.e., the cost required to replace the item you own with a new one at present. The actual cash value is the value of an appliance after considering depreciation due to wear and tear. The actual cash value is the difference between the replacement cost and the depreciation cost .

Q: What do you mean by depreciation rate?

The depreciation rate tells you how much the appliance depreciate each year . It is the set percentage value or rate at which an item loses its value . For instance, the depreciation rate of a $50 water heater is 10% . Every year the water heater would lose 10% of $50 = $5 in its value. This value is known as the actual cash value of the appliance.

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Table of contents

What is appliance depreciation?Actual cash value vs replacement value 🤔How to calculate depreciation on appliances Example: Using the appliance depreciation calculator Appliance depreciation table FAQs

The appliance depreciation calculator estimates the actual cash value of any home appliances that you own. Whether you are thinking about replacing your old appliances like a washing machine or dealing with a home insurance policy that offers replacement cash value or actual cash value, this calculator has got you covered!

The following article will explain the difference between replacement cost and actual cash value. There's also an appliance depreciation table at the end to give you an idea of how much appliances depreciate each year. Not just for appliances, you can also use this tool to estimate the depreciation cost of other things, like the roof of your house or a window. You can start by entering some numbers in the calculator or continue reading to understand appliance depreciation (see depreciation calculator) and how do you calculate depreciation.

What is appliance depreciation?

The devices or appliances we own get older as time passes. With regular usage of said appliances, there's wear and tear that causes damage to it, and the value of our devices reduces. This reduction in the value of the appliances is appliance depreciation.

The appliance depreciation has four components:

Depreciation rate (DR) — Rate at which the value of appliance is getting depreciated;
Age of item — Number of years in use or since purchase;
Actual cash value (ACV) — Current valuation or the replacement cash value minus the depreciated value of the appliance; and
Replacement cash value (RCV) — Amount it would take to replace the appliance at present.

The depreciation formula is:

\scriptsize \text{ACV} = \text{RCV} - (\text{DR}/100 \times \text{RCV} \times \text{Age})

While buying insurance cover for your home appliances or personal property, please read the terms and conditions for these terms. It is often the case that the insurance provider only pays the actual cash value of the objects rather than the replacement cash value. There are also different policy types based on the above parameters.

Policy document
Please read your policy declarations carefully to check if it covers the replacement cash value to receive maximum benefits in any accidents, thefts, or other unpleasant circumstances. Also, look for additional factors like deductibles and limits.

Actual cash value vs replacement value 🤔

The policy that covers replacement cash value will pay you the value of goods without any deduction for depreciation, i.e., the insurer will likely reimburse you a larger sum that you can use to buy yourself the covered personal property directly. However, if the policy covers the actual cash value, the money you'll receive upon claims is the present value of the appliance considering the depreciation. You may have to make the out-of-pocket expense to cover the rest of the cost of replacing the device.

Interested in other home-related calculators? Be sure to check out our grocery calculator to help you manage your monthly budget.

How to calculate depreciation on appliances

You can calculate the appliance depreciation using the above equation. Follow the steps below:

Select the appliance from the list or enter the depreciation rate directly by first selecting Set custom depreciation rate from the bottom of the dropdown list.
Fill in the age of the item.
Insert the replacement cash value.
The appliance depreciation calculator will return the appliance's actual cash value.

Example: Using the appliance depreciation calculator

Find the actual cash value for a 4-year old space heater presently available for $75.

To find the depreciation cost for a space heater:

Select the appliance from the list as space heater.
Fill in the age of the item as 4 years.
Insert the replacement cash value as $75.
The actual cash value is:

\qquad \scriptsize \begin{align*} \text{ACV} &= 75 - (6.67/100 \times 75 \times 4) \\ &= \text{\textdollar}54.99 \end{align*}

Appliance depreciation table

The table below has the depreciation rate of most of the appliances:

Appliance	Rate	Appliance	Rate
Built-in wine cooler	7.14	Refrigerator	12.50
Central air conditioning	7.00	Refrigerator - regular	6.67
Dehumidifier	10.00	Sewing machine	5.00
Dishwasher	12.50	Space heater	6.67
Electric dryer	8.33	Stoves, ranges – electric	5.88
Electric floor polisher	6.67	Sump pumps	10.00
Freezer	5.00	Tankless water heater	5.00
Garbage disposal	10.00	Trash compactor	10.00
Gas charbroiler	5.56	Vaccum cleaner (large)	16.67
Gas dryer	7.69	Vacuum cleaner (small)	10.00
Gas stove	5.26	Washer	12.50
Hand dryer	9.09	Washer-dryer	12.50
Ironers	10.00	Water heater	10.00
Microwave oven	10.00	Water pumps	10.00
Range hood	7.14

🙋 You can protect your appliances and wiring using an appropriately sized circuit breaker. Don't know how? Check our breaker size calculator to learn more about it!

FAQs

How do you calculate depreciation on appliances?

To calculate depreciation on appliances:

Multiply the age of the appliance by the replacement cash value.
Multiply this product with the depreciation rate to obtain the depreciated value of appliances.
Subtract the depreciation value from the replacement cash value to find out the actual cash value of the appliance.

What is the difference between replacement cost and actual cash value?

The replacement cash value is the current cost of the product in the market, i.e., the cost required to replace the item you own with a new one at present. The actual cash value is the value of an appliance after considering depreciation due to wear and tear. The actual cash value is the difference between the replacement cost and the depreciation cost.

What do you mean by depreciation rate?

The depreciation rate tells you how much the appliance depreciate each year. It is the set percentage value or rate at which an item loses its value. For instance, the depreciation rate of a $50 water heater is 10%. Every year the water heater would lose 10% of $50 = $5 in its value. This value is known as the actual cash value of the appliance.

What are the factors affecting actual cash value of an appliance?

The actual cash value of an appliance primarily depends upon the depreciation rate – the rate at which the value of the appliance is getting depreciated – and the age of item, which is the number of years in use or since the purchase made.

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