Straight Line Depreciation Calculator

Straight Line Depreciation Calculator

The most common approach to determining depreciation is known as straight line depreciation. This amount is applied to an asset over its useful lifespan. The following steps are involved in calculating depreciation:

  1. Find out the cost of the asset
  2. Figure out the salvage value of the asset
  3. Determine the asset’s useful lifespan in years
  4. Divide the cost of the asset by the asset’s useful lifespan in years to get the rate of depreciation
  5. Multiply the rate of depreciation with the cost and subtract the salvage value to get the annual depreciation

For instance, a machine is bought for $30,000 and will remain useful for five years. At the end of five years, it can be sold for $8,000. Here is how to find the annual depreciation:

Rate of depreciation = 1/5 = 20% annual depreciation = 20% x ($30,000 – $8,000) = $4,400