This straight line depreciation calculator estimates the accounting depreciation value by considering the asset’s cost, its salvage value and life in no. of periods. There is more information on this topic, below the application.
How does this straight line depreciation calculator work?
This is an accounting tool might come in handy when trying to approximate the straight line depreciation value for a given asset by specifying its cost, estimated salvage value at the end of the usage life.
The algorithm behind this straight line depreciation calculator uses the SLN formula as it is explained below:
Periodic straight line depreciation = (Asset cost - Salvage value) / (Useful life (no. of periods))
Moreover this also displays a depreciation schedule which consists in this information:
- Year: the schedule is presented on an annually basis.
- Start booking value which is the figure registered in accounting at the beginning of which year.
- Depreciation value is the amount the asset gets depreciated by each period of usage from its entire life.
- Accumulated depreciation is an intermediary balance of the reduction of in the value.
- Value at the end of the year per each line is the figure obtained by subtracting the amortization from the start booking figure.
Straight line depreciation definition
In accountancy this is probably the most often used methodology to register the amortization of an asset as it is the simplest one to track. Its equation is as follows: divide the difference between the asset's cost and its expected salvage value by the number of periods (number of years) it is assumed to be used.
Its main advantage is that it spreads out the asset’s cost equally over the estimated lifetime, while it may also constitute a disadvantage as it does not take account of the capacity utilization of the asset. For instance, no matter if in one year an asset that concurs to production of a certain good is used intensively in comparison with another year.
Other assets amortization methods in accountancy
- Activity approach figures out the amortizationper activity level and for any period by considering the activity for that period. For instance: miles for a vehicle, an automatic machine time usage.
- Declining balance method forecasts an accelerated depreciation for a specific period. Please note that this does not takes account the salvage value in the depreciation of each period.
- Double declining balance method is an accelerated approach by which the beginning booking value of each period is multiplied by a constant rate of 200% of the straight line depreciation rate.
- Variable declining method which is a mix between the declining balance amortization and the straight line depreciation approaches.
In accountancy it is important to choose the proper method depending on the objectives and the financial constraints, otherwise it may result in bad figures for the company.
Example of a calculation
In case of an assest registered initially at a value of $50,000, whose salvage value will be estimated to $5,000 after an usage period of 15 years the following figures will result:
■ Periodic Straight Line Depreciation: 3,000.00
| Year | Start booking value | Depreciation value | Accumulated Depreciation | Value at the end of the year |
|---|---|---|---|---|
| 2015 | 50,000.00 | 2,750.00 | 2,750.00 | 47,250.00 |
| 2016 | 47,250.00 | 3,000.00 | 5,750.00 | 44,250.00 |
| 2017 | 44,250.00 | 3,000.00 | 8,750.00 | 41,250.00 |
| 2018 | 41,250.00 | 3,000.00 | 11,750.00 | 38,250.00 |
| 2019 | 38,250.00 | 3,000.00 | 14,750.00 | 35,250.00 |
| 2020 | 35,250.00 | 3,000.00 | 17,750.00 | 32,250.00 |
| 2021 | 32,250.00 | 3,000.00 | 20,750.00 | 29,250.00 |
| 2022 | 29,250.00 | 3,000.00 | 23,750.00 | 26,250.00 |
| 2023 | 26,250.00 | 3,000.00 | 26,750.00 | 23,250.00 |
| 2024 | 23,250.00 | 3,000.00 | 29,750.00 | 20,250.00 |
| 2025 | 20,250.00 | 3,000.00 | 32,750.00 | 17,250.00 |
| 2026 | 17,250.00 | 3,000.00 | 35,750.00 | 14,250.00 |
| 2027 | 14,250.00 | 3,000.00 | 38,750.00 | 11,250.00 |
| 2028 | 11,250.00 | 3,000.00 | 41,750.00 | 8,250.00 |
| 2029 | 8,250.00 | 3,000.00 | 44,750.00 | 5,250.00 |
| 2030 | 5,250.00 | 250.00 | 45,000.00 | 5,000.00 |