Straight-Line Depreciation Template
This straight-line depreciation template demonstrates how to calculate depreciation expense using the straight-line depreciation method.
Below is a screenshot of the straight-line depreciation template:
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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 valueSalvage ValueSalvage value is the estimated amount that an asset is worth at the end of its useful life. Salvage value is also known as scrap value or residual value, and is used in calculating depreciation expense. The value depends on how long the company expects to use the asset and how hard the asset is used. For example, if a. Straight-line depreciation is the most commonly used and straightforward depreciation methodDepreciation ExpenseDepreciation expense is used to reduce the value of plant, property, and equipment to match its use, and wear and tear, over time. Depreciation expense is used to better reflect the expense and value of a long-term asset as it relates to the revenue it generates. for allocating the cost of an assetIntangible AssetsAccording to the IFRS, intangible assets are identifiable, non-monetary assets without physical substance. Like all assets, intangible assets are those that are expected to generate economic returns for the company in the future. As a long-term asset, this expectation extends beyond one year.. 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
Where:
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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