How can depreciation commonly be determined?

Depreciation is commonly determined through standard depreciation schedules and estimating software, which provide a systematic approach to calculating the reduction in value of an asset over time. These resources utilize established formulas and factors to account for the asset's useful life, wear and tear, and other pertinent factors influencing its value.

Standard depreciation schedules, such as the Modified Accelerated Cost Recovery System (MACRS), help to automate the process by giving clear guidelines on how long different types of assets should be depreciated. Estimating software can further streamline this process by offering tools that incorporate various factors, including the asset's age, condition, and category, which all influence the depreciation calculation.

This method ensures consistency and reliability in the depreciation estimates, making it suitable for a broad range of assets and situations as opposed to relying on individual judgment or singular documents, such as receipts or expert opinions alone.