How to calculate depreciation by straight line method.

1. Depreciation
THE STRAIGHT LINE METHOD
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2. Equipment costing $60,000 is estimated to have a useful lifetime of
5 years and a scrap value of $8000.
Prepare a depreciation schedule using he straight line method.
= 60,000 – 8,000
5
= 10,400
= (Original cost of the asset – Scrap value of the asset)
Estimated useful life time of the asset (in year)
Depreciation expense
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3. End of year
Depreciation
expense
Accumulated
depreciation
Book value
0 0 0 60,000
1 10,400 =10,400
= 60,000 – 10,400
= 49,600
2 10,400
= 10,400 + 10,400
= 20,800
= 49,600 – 10,400
= 39,200
3 10,400
= 20,800 + 10,400
= 31,200
= 39,200 – 10,400
= 28,800
4 10,400
= 31,200 + 10,400
= 41,600
= 28,800 – 10,400
= 18,400
5 10,400
= 41,600 + 10,400
= 52,000
= 18,400 – 10,400
= 8,000 (Scrap value)
Straight Line Method
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4. MS – Excel : SLN function
=SLN(Cost,Salvage,
Life)
=SLN(60000,8000,
5)
=10400
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