Depreciation is a business expense, it represents the reduction in value of a long term asset due to wear and tear.
There are various methods used to calculate the depreciation expense of which the simplest and most generally used is the straight line depreciation method. This calculator will perform the straight line depreciation calculation for you, and work out the annual depreciation expense and the implied depreciation rate.
The calculation is carried out using the straight line depreciation formula which takes the cost of the asset less any expected salvage (residual) value and divides this by the anticipated useful life of the asset. The formula for straight line depreciation is given as follows:
Full details of how the straight line depreciation method is used can be found in our depreciation tutorials.
Using the Straight Line Depreciation Calculator
The Excel straight line depreciation calculator, available for download below, is used to compute straight line depreciation by entering details relating to the asset. The calculator is used as follows:
- Enter the cost of the asset. The cost of the asset can be found in the long term asset account, asset register, or on the original source document (invoice) for the asset
- Enter the salvage value. The salvage or residual value is the amount the asset is expected to be worth at the end of its useful life. The straight line depreciation calculator works out the cost which is subject to depreciation, known as the depreciable cost.
- Enter the useful life. The useful life is the anticipated time in years which the asset is expected to be useful to the business. The straight line depreciation calculator works out the annual depreciation expense for the asset and the implied depreciation rate.
Straight Line Depreciation Calculator Download
The straight line depreciation spreadsheet is available for download in Excel format by following the link below.
Users use this straight line depreciation calculator at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a straight line method of depreciation calculator that you might use when considering how to calculate straight line depreciation. It is purely illustrative. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in this straight line depreciation template, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.