The Excel SLN function will calculate the depreciation of an asset on a straight line basis for one period. The function has the syntax shown below.
SLN (cost, salvage, life)
Cost = The initial cost of the asset at the start of period 1
Salvage = The salvage or residual value of the asset at the end of its life.
Life = The useful life of the asset
The SLN function uses the following formula to make its calculations.
Straight line depreciation = (Cost - Salvage) / Life
Use of the Excel SLN Function
The Excel SLN function is used to calculate the periodic straight line depreciation of a long term asset. It is important to realize that the straight line depreciation is a fixed amount for each period of the assets life..
Straight Line Depreciation SLN Example
To illustrate suppose a business purchases an asset costing 10,000 which is estimated to have a useful life of 5 years and a salvage value of 600. The calculation of the annual straight line depreciation using the SLN function is as follows:
Cost = 10,000 Salvage = 600 Life = 5 years Depreciation = SLN (cost, salvage, life) Depreciation = SLN (10000,600,5) Depreciation = 1,880
The straight line depreciation for the asset using the SLN function is 1,880 a year.
Additionally the same answer can be obtained using the straight line depreciation formula as follows.
Depreciation = (Cost - Salvage) / Life Depreciation = (10,000 - 600) / 5 Depreciation = 1,880
Using the Excel SLN Function for Monthly Periods
In the above example the SLN function was used to calculate the annual depreciation. The function could equally well be used to calculate the monthly depreciation by defining the life in terms of months instead of years.
Suppose for example, the business purchased an asset costing 5,000 with an estimated salvage value of 800 and a useful life of 30 months, then using the Excel function the monthly straight line depreciation is calculated as follows:
Cost = 5,000 Salvage = 800 Life = 30 months Depreciation = SLN (cost, salvage, life) Depreciation = SLN (5000,800,30) Depreciation = 140
The straight line depreciation is calculated as 140 a month.
The function is one of many Excel finance functions used in financial calculations, discover another at the links below.
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 and has built financial models for 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 degree from Loughborough University.