For example, if the $40,000 coffee roaster has a useful life of seven years and a $5,000 salvage value, the annual depreciation expense would be $5,000 [ ($40,000 historical cost—$5,000 salvage ...

Capitalized costs can't just sit on the balance sheet forever. Inventory gets sold, for example, and trucks last only so long. Say your company has $5,000 worth of inventory on its balance sheet ...