What formula is used to find the dollar amount of Depreciation?

The formula to find the dollar amount of depreciation is based on determining the replacement cost new (RCN) of an asset and the percentage of depreciation applicable to that asset. The correct choice incorporates these elements effectively.

To calculate depreciation, one first needs to determine the effective age (EA) of the asset and the total economic life (TEL). The formula shows that by dividing EA by TEL, you can find the percentage of depreciation. This percentage is then converted from a percentage format to decimal form by dividing by 100.

This decimal representation is then multiplied by the RCN to arrive at the dollar amount of depreciation. Therefore, this approach allows for a clear, methodical calculation linking the asset's age and economic lifespan directly with its replacement cost, which is essential for an accurate appraisal of value loss over time.

The other choices do not accurately reflect the relationship between these components needed to calculate the depreciation amount adequately or involve irrelevant calculations that do not lead to an effective depreciation dollar figure.