Calculate straight line depreciation for any asset by entering the Asset Cost, Salvage Value, and Useful Life. You'll get the annual depreciation expense, depreciation rate, and a full depreciation schedule showing book value year by year.
Annual Depreciation Expense
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Depreciation Rate
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Depreciable Cost
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Total Depreciation
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Final Book Value (Salvage)
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Straight line depreciation spreads the cost of an asset evenly over its useful life. Each year the same fixed amount is deducted, calculated as (Asset Cost − Salvage Value) ÷ Useful Life. It is the simplest and most widely used depreciation method.
Salvage value (also called residual value or scrap value) is the estimated worth of an asset at the end of its useful life. It is subtracted from the asset cost to determine the total depreciable amount. If an asset is expected to be worthless, the salvage value is zero.
The depreciation rate is simply 1 divided by the useful life of the asset, expressed as a percentage. For example, an asset with a 5-year useful life has a depreciation rate of 1/5 = 20% per year.
The placed-in-service date is when the asset was first put to use for its intended purpose. This date determines when depreciation begins and affects the depreciation amount in the first and last years, especially when conventions like mid-month or half-year apply.
Conventions determine how much depreciation you take in the first and last year of an asset's life. Common conventions include Full-Month (depreciation for the entire placed-in-service month), Mid-Month (half a month's depreciation), Mid-Quarter, and Half-Year. The IRS specifies which convention to use for tax purposes.
The formula is: Annual Depreciation = (Asset Cost − Salvage Value) ÷ Useful Life. For example, an asset costing $10,000 with a $1,000 salvage value and a 5-year life has annual depreciation of ($10,000 − $1,000) ÷ 5 = $1,800 per year.
Straight line depreciation produces equal expense amounts each year, making it predictable and simple. Methods like declining balance or MACRS front-load depreciation, resulting in higher deductions in early years. Straight line is preferred for assets that provide consistent utility over time, such as buildings and furniture.
Microsoft Excel provides the SLN() function: =SLN(cost, salvage, life). Enter the asset cost, salvage value, and useful life in years, and Excel returns the annual straight line depreciation amount. This matches the basic formula used by this calculator.