What is the SLN Function (Straight Line)?
The SLN function will calculate the depreciation of an asset on a straight-line basis for one period. In financial modelingFinancial ModelingThe SLN function is categorized under Financial functions. It will calculate the straight line depreciation of an asset basis for one period. In financial modeling, the SLN function helps calculate the depreciation of a fixed asset when building budgets. Formula =SLN(cost, salvage, life) The SLN function uses, the SLN function helps calculate the straight line depreciationStraight Line DepreciationStraight line depreciation is the most commonly used and easiest method for allocating depreciation of an asset. With the straight line method, the annual depreciation expense equals the cost of the asset minus the salvage value, divided by the useful life (# of years). This guide has examples, formulas, explanations of a fixed asset when building a budget.
Learn more about various types of depreciation methodsDepreciation MethodsThe most common types of depreciation methods include straight-line, double declining balance, units of production, and sum of years digits. There are various formulas for calculating depreciation of an asset. This guide is an overview of book value, depreciation expense calculations, formulas, examples, graphs.
Formula
=SLN(cost, salvage, life)
The SLN function uses the following arguments:
- Cost (required argument) – It is the initial cost of the asset.
- Salvage (required argument) – It is the value at the end of the depreciation (sometimes called the salvage value of the asset).
- Life (required argument) – It is the number of periods over which the asset is depreciated (sometimes called the useful life of the asset).
Notes
- Straight-line depreciation is the simplest way of calculating the depreciation of a fixed asset.
- The formula used in calculating straight-line depreciation is:
Where:
- Cost is the initial cost of the asset (at the start of period 1).
- Salvage is the final value of the asset at the end of its lifetime.
The straight-line depreciation method subtracts a fixed amount from the value of an asset during each period of the asset’s lifetime.
How to use the SLN Depreciation Function in Excel?
To understand the uses of the SLN function, let us consider an example:
Example – Straight-line depreciation
Suppose we are given the following data and we need to calculate the depreciation using the straight-line method:
- Cost of the asset: $45,000
- Salvage value (if any): $7,500
- Useful life (in years): 10
To calculate the straight-line depreciation, we will use the following formula:
We get the result below:
$3,750 would be the depreciation to charged yearly for the given asset.
If the asset was purchased in the middle of the year after the start of the financial year, the depreciation would be charged on a pro-rated basis.
Few notes about the SLN Depreciation Function
- #DIV/0! error – Occurs if the given life argument is equal to zero.
- #VALUE! error – Occurs if any of the given argument is non-numeric.
Click here to download the sample Excel file
Additional resources
Thanks for reading CFI’s guide to important Excel functions! By taking the time to learn and master these functions, you’ll significantly speed up your financial modeling & analysisFMVA™ CertificationThe Financial Modeling & Valueation Analyst (FMVA)™ accreditation is a global standard for financial analysts that covers finance, accounting, financial modeling, valuation, budgeting, forecasting, presentations, and strategy. . To learn more, check out these additional resources:
- Excel Finance FunctionsExcel for FinanceThis Excel for Finance guide will teach the top 10 formulas and functions you must know to be a great financial analyst in Excel. This guide has examples, screenshots and step by step instructions. In the end, download the free Excel template that includes all the finance functions covered in the tutorial
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