What is the definition of depreciable value?

Depreciable value refers to the total value of the asset that will be consumed over its useful life. This value is essentially the cost of the asset minus its estimated residual or salvage value, which is the amount expected to be received at the end of the asset's useful life when it is sold or disposed of.

The depreciable value is crucial for determining how much of the asset's cost can be allocated as an expense in a given period through depreciation. This allocation reflects the usage and wear-and-tear of the asset as it is used to generate revenue for the business over time. Understanding depreciable value is important for accurate financial reporting and tax calculations, since it impacts the company's profit and asset valuations.

In contrast, the total amount invested in equipment refers to the initial purchase cost and does not account for the reduction in value over time. The value an asset adds to the business incorporates both its productive capacity and the revenues it generates, but it isn't a measure of depreciation. Lastly, the market value at the end of an asset's life is the estimated resale value and does not capture depreciation. Thus, the correct understanding of depreciable value lies specifically with the concept of total worth consumed through usage in the asset's useful life.