Straight-Line Depreciation Calculator
Calculate annual straight-line depreciation, generate a year-by-year schedule of book values, and see accumulated depreciation over the asset's life.
📉 Accounting📐 Annual depreciation = (cost − salvage value) / useful life💼 Business
Asset cost
Salvage value
Useful life (years)
Years elapsed
Please enter valid values.
Formula & Reference
| Variable | Symbol | Formula | Units |
|---|---|---|---|
| Straight-Line Depreciation Calculator | — | Annual depreciation = (cost − salvage value) / useful life | currency per year |
Step-by-Step Examples
Example 1
Standard Asset
Cost 45,000, salvage 5,000, 8 year life, 3 years elapsed.
- Depreciable base = 45,000 − 5,000 = 40,000
- Annual = 40,000 / 8 = 5,000
- After 3 years: accumulated 15,000, book value 30,000
- Remaining depreciation = 25,000 over 5 years
✓ 5,000 per year, book value 30,000
Example 2
No Salvage Value
Cost 24,000, no salvage, 4 year life.
- Depreciable base = 24,000
- Annual = 6,000, or 25% per year
- Book value reaches zero at end of year 4
✓ 6,000 per year
Example 3
Fully Depreciated
Cost 60,000, salvage 8,000, 10 year life, 12 years elapsed.
- Annual = 5,200
- Depreciation stops at the end of useful life
- Accumulated caps at 52,000, book value stays at 8,000 salvage
✓ Book value held at 8,000 salvage
Real-World Applications
Financial Reporting
Straight-line is the most widely used depreciation method for financial statements due to its simplicity and even expense recognition.
Budgeting
Even annual charges make straight-line depreciation easy to forecast across multi-year budgets.
Asset Registers
Book value tracking supports insurance valuations, disposal decisions, and impairment assessment.
Method Comparison
Comparing against declining balance shows how method choice shifts expense timing without changing total depreciation.
Common Mistakes to Avoid
⚠️
Depreciating below salvage value
Depreciation stops once book value reaches salvage. Continuing beyond it overstates expense and understates asset value.
⚠️
Confusing book depreciation with tax depreciation
Tax authorities often mandate specific methods and lives that differ from financial reporting, creating timing differences that must be tracked separately.
⚠️
Ignoring partial first years
Most standards require depreciation from the date the asset is available for use, so the first year is often a partial period rather than a full one.
Frequently Asked Questions
How is straight-line depreciation calculated? ▾
Subtract salvage value from cost, then divide by useful life in years. The result is the same expense each year.
What is salvage value? ▾
The estimated amount recoverable at the end of the asset's useful life. It is excluded from the depreciable base.
Why choose straight-line over declining balance? ▾
It gives even expense recognition, which matches assets that deliver consistent benefit over time and makes budgeting simpler.
Does depreciation affect cash flow? ▾
Not directly — it is a non-cash expense. It affects cash indirectly by reducing taxable income and therefore tax paid.
What happens when an asset is fully depreciated? ▾
Depreciation stops and the asset sits at salvage value on the balance sheet until disposed of, even if still in use.