This straight-line depreciation template demonstrates how to calculate depreciation expense using the straight-line depreciation method.
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With the straight-line depreciation method, the value of an asset is reduced uniformly over each period until it reaches its salvage value. Straight-line depreciation is the most commonly used and straightforward depreciation method for allocating the cost of an asset. It is calculated by dividing the cost by the useful life of the asset.
Formula for Straight Line Depreciation
The formula for straight-line depreciation is as follows:
Annual Depreciation Expense = (Cost of the Asset − Salvage Value) / Useful Life of the Asset
Cost of the asset is the purchase price of the asset
Salvage value is the value of the asset at the end of its useful life
Useful life of the asset represents the number of periods in which the asset is expected to be used by the company
Additionally, the straight-line depreciation rate can be calculated as follows:
Straight Line Depreciation Rate = Annual Depreciation Expense / (Cost of the Asset − Salvage Value)
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