Straight-Line Calculation

The basis used in straight-line depreciation is calculated by subtracting the salvage value from the acquisition value; the result is the adjusted basis. Straight-line depreciation is calculated by dividing the adjusted basis by the useful life. The first and last years of the asset's depreciable life must be prorated if the company places the asset in service at any time other than the beginning of the first month of the fiscal year. The total amount depreciated can never exceed the adjusted basis. At the end of the asset's estimated life, the salvage value will remain.