Straight-Line Depreciation

The equation for calculating straight-line depreciation is:

Acquisition Cost - Salvage Value Life in Years

=

Annual Depreciation

Here is an example:

Placed-in-Service Date:	01/01/2021
Equipment Cost:	$16,000
Salvage Value:	$1,000
Useful Life:	5 years

 

Years 1 through 5:

16,000 - 1,000 5 Years

=

$3,000 per year

 

Note: This is a simplified example. The program contains several straight-line depreciation methods, and each one uses a different averaging convention. The depreciation deduction in the placed-in-service year and final year may vary depending on the placed-in-service date and which averaging convention you select. The depreciation deduction will also be different in the year of disposal (if any), or if there is a short year.