[header] How to calculate depreciation on fixed assets [title] Enter the asset's purchase price. [step] For example, if you bought factory equipment for $1 , 000, then that's the amount that you'll use as the purchase price. [title] Subtract the salvage value from the purchase price to find the depreciable cost. 
[step] The " scrap " or " salvage " value of the item represents how much it will be worth once it's outlived its usefulness. Subtract that number from the purchase price to get the depreciable cost.