How is the straight-line method of depreciation calculated?

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Question: How is the straight-line method of depreciation calculated?

Options:

Correct Answer: Cost - Salvage Value / Useful Life

Solution:

The straight-line method of depreciation is calculated as (Cost - Salvage Value) / Useful Life.

How is the straight-line method of depreciation calculated?

How is the straight-line method of depreciation calculated?

Step 1: Determine the initial cost of the asset. This is how much you paid for it.
Step 2: Find out the salvage value of the asset. This is the estimated value of the asset at the end of its useful life.
Step 3: Determine the useful life of the asset. This is how long you expect to use the asset, usually measured in years.
Step 4: Subtract the salvage value from the initial cost. This gives you the total amount that will be depreciated.
Step 5: Divide the result from Step 4 by the useful life. This gives you the annual depreciation expense.

Straight-Line Depreciation – A method of allocating the cost of a tangible asset over its useful life evenly.