Determine how much the car cost at the time of purchase. Include all costs, such as acquisition, preparation for the car to be used for the company, relevant sales and company taxes, title fees and licensing fees.
List the various factors that directly affect the value of a car, including frequency of use, the age of purchase, car repair policy, improvements or additions, environmental conditions, laws and economic changes that have affected the use of the car.
Calculate the residual value of the company car. This is the dollar amount the car is worth after being disposed of, whether it is sold, traded or scrapped. In other words, this is what the car is worth now.
Calculate the depreciable base value of the car by subtracting the residual value calculated in the previous step from the cost of the vehicle, determined in Step 1.
Divide this number by the number of useful life periods the car has. A period is usually calculated per annum. For example, a car can have 20 periods of useful life before it is traded in.
Take the final accumulated depreciation value and subtract it from the cost of the vehicle to determine the value of the company car at the given time. To assess the value of the company car in six months, use updated information and the running balance of the accumulated depreciation, which changes as the car adds on useful life periods and factors that affect the overall asset value of the car.As a business, you need to assess the value of your assets, including your company car. Knowing the value of your company car is necessary each year when expense reports and annual reports need to be completed. Using proper depreciation methods, you can estimate the value of your company car for accounting purposes and tax benefits.