Straight Line Depreciation Method

The Straight Line method is the simplest way to calculate depreciation. It assumes that an asset loses the same amount of value every year until it reaches its salvage value.

The Formula

(Cost - Salvage Value) / Useful Life

Example Calculation

You buy an office desk for $2,000. You expect it to last 10 years and sell it for $200 at the end.

Cost: $2,000
Salvage Value: $200
Depreciable Base: $1,800 ($2,000 - $200)
Useful Life: 10 Years

Annual Depreciation = $1,800 / 10 = $180 per year.

When to use it?

Housing & Buildings: Real estate depreciates slowly and steadily.
Furniture: Desks and chairs wear out evenly over time.
Intangible Assets: Patents and copyrights are amortized using straight line.