Depreciation Calculator · Practical guide
Straight-Line Depreciation Formula with Example
Subtract salvage value from cost, divide by useful life — the same expense every year until the asset is fully depreciated.
At a glance
Quick answer
The straight-line depreciation formula is: Annual Depreciation = (Asset Cost − Salvage Value) / Useful Life. A $50,000 machine with a $5,000 salvage value and a 5-year life depreciates exactly $9,000 per year.
Interactive tool
Depreciation Calculator
Enter your own values, then compare the result with the examples below.
Results
| Year | Depreciation | Accumulated Depreciation | Book Value |
|---|
Worked Example
Depreciable base: $50,000 − $5,000 = $45,000. Divided across 5 years, that is $9,000 of expense each year, and book value falls by the same $9,000 annually until it lands exactly on salvage value.
| Year | Depreciation | Accumulated | Book value |
|---|---|---|---|
| 1 | $9,000 | $9,000 | $41,000 |
| 2 | $9,000 | $18,000 | $32,000 |
| 3 | $9,000 | $27,000 | $23,000 |
| 4 | $9,000 | $36,000 | $14,000 |
| 5 | $9,000 | $45,000 | $5,000 |
Why Straight Line Is the Default
It is the simplest and most widely used method: identical expense every period, easy to budget, and accepted everywhere. It fits assets that wear out evenly over time — buildings, furniture, and office equipment are classic cases.
When to Pick Another Method
- Assets that lose value fastest early — vehicles, computers — suit declining balance.
- Sum-of-years-digits also front-loads expense but follows a smoother schedule.
- All three methods stop at salvage value; only the timing differs.
Enter your own cost, salvage, and life above to generate the full schedule instantly.
Frequently Asked Questions
What is salvage value in the formula?
Salvage value is what you expect to sell or scrap the asset for at the end of its useful life. Depreciation stops once book value reaches it, so the asset is never written down below salvage.
Can I depreciate an asset to zero?
Yes — enter a salvage value of zero and the full cost is spread across the useful life. Many small assets are depreciated to zero when no resale value is expected.
Is straight-line depreciation used for taxes?
For US taxes, most business equipment uses MACRS instead. Straight line is standard for financial (book) reporting and is always allowed as an alternative.
What happens if useful life is wrong?
An overestimated life understates annual expense, and an underestimated life overstates it. Accounting rules let you revise the remaining life prospectively if estimates change.