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How is straight-line depreciation calculated?
How is straight-line depreciation calculated?
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Practice Questions
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Q1
How is straight-line depreciation calculated?
Cost of asset - Salvage value / Useful life
Cost of asset / Useful life
Cost of asset - Salvage value
Cost of asset / Salvage value
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Straight-line depreciation is calculated by taking the cost of the asset minus its salvage value and dividing it by its useful life.
Questions & Step-by-step Solutions
1 item
Q
Q: How is straight-line depreciation calculated?
Solution:
Straight-line depreciation is calculated by taking the cost of the asset minus its salvage value and dividing it by its useful life.
Steps: 5
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Step 1: Determine the cost of the asset. This is the amount you paid to acquire it.
Step 2: Find out the salvage value. This is the estimated value of the asset at the end of its useful life.
Step 3: Calculate the useful life of the asset. This is how long you expect to use the asset.
Step 4: Subtract the salvage value from the cost of the asset. This gives you the total amount that will be depreciated.
Step 5: Divide the result from Step 4 by the useful life of the asset. This gives you the annual straight-line depreciation.
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