Straight Line Depreciation Calculator

Straight Line Depreciation Calculator, Free and Online

Straight line is the default depreciation method most businesses use for their own books, and it is exactly what most accounting classes teach first, because it is the easiest to compute and the easiest to explain to someone who is not an accountant. Enter the asset cost, the estimated salvage value, and the useful life in years, and this straight line depreciation calculator gives you the annual depreciation, the depreciation rate, and a full year by year schedule showing accumulated depreciation and book value. Pro mode adds three more methods used when a business wants to accelerate deductions or match expense to actual usage, a side by side comparison of all four, a book value chart, and export options for handing a schedule to a client or filing it with your own records.

1Simple vs Pro, What Each Mode Includes

2The Four Depreciation Methods, Quick Reference

The mistake that trips up the most people using an accelerated method is forgetting that book value can never fall below salvage value. Double Declining Balance applies a fixed rate to whatever the asset is currently worth, which means left alone it would approach zero but never actually reach it. The correct handling, and what this calculator does automatically, is to switch over to straight line partway through the schedule once that method would depreciate the asset faster than DDB would on its own, guaranteeing the asset lands exactly on its salvage value in the final year rather than drifting past it or falling short.

3Where Formal Depreciation Accounting Actually Came From

Depreciation as a required, standardized accounting practice is younger than most people assume. For much of the 19th century, many companies simply expensed the full cost of a machine or a building in the year they bought it, or ignored the asset's declining value entirely until it was finally sold or scrapped, either of which produced a profit figure that had little to do with economic reality. According to a study published in the Accounting Historians Journal, the American railroads forced the issue. In June 1907, the Interstate Commerce Commission ordered railroads to abandon the older betterment accounting they had been using and adopt formal depreciation accounting for their equipment instead. The railroads protested loudly, arguing they were already accounting for wear and tear under the old system, but the ICC held that matching the cost of long lived equipment to the revenue it helped generate, year by year, gave regulators a far more reliable picture of a railroad's actual earnings. That fight over a handful of railroad ledgers in the early 1900s is a direct ancestor of the straight line method taught in every introductory accounting course today.

4Frequently Asked Questions