The Depreciable Cost Formula is a method of calculating the total cost that can be depreciated over its useful life. It allows businesses to recognize an asset’s value in their financial statements over time. The formula takes the purchase price or cost of the asset and subtracts any associated salvage value, market appreciation, or cost reimbursed by insurance. The resulting figure is referred to as the “depreciable cost” and typically spread out and depreciated evenly over the assets life span. This accounting principle ensures that assets are reported on the books at their true value, helping business owners make more informed and accurate investments.