Straight-Line Depreciation Calculator
Straight-line depreciation spreads the cost of a fixed asset evenly over its useful life. It is the method required or preferred under US GAAP for most assets because it matches the expense pattern to a steady consumption of the asset's benefits. To calculate it, subtract the salvage value from the purchase cost, then divide by the number of years in the useful life. The result is the annual depreciation expense you record on your income statement and use to reduce the asset's book value on the balance sheet.
Straight-line depreciation formula
Depreciable Cost = Asset Cost - Salvage Value
Annual Depreciation = (Asset Cost - Salvage Value) / Useful Life
Monthly Depreciation = Annual Depreciation / 12
Example: Cost $50,000, Salvage Value $5,000, Life 10 years. Depreciable Cost = $45,000. Annual Depreciation = $45,000 / 10 = $4,500. Monthly = $4,500 / 12 = $375.00.
Straight-line vs other depreciation methods
- Straight-line: equal expense every year. Best when asset benefits are consumed evenly.
- Double declining balance: accelerated method, higher expense in early years. Common for assets that lose value quickly.
- MACRS (for tax): mandated by IRS, uses published percentage tables by asset class. Not the same as GAAP book depreciation.
- Units of production: expense varies with output. Best for machinery where wear depends on usage, not time.
Frequently asked questions
What is straight-line depreciation?
Straight-line depreciation allocates an equal portion of an asset's depreciable cost to each year of its useful life. It is the simplest and most commonly used depreciation method for financial reporting purposes.
What is salvage value?
Salvage value (also called residual value or scrap value) is the estimated value of the asset at the end of its useful life. If the asset will be worthless at the end, salvage value is $0. Only the depreciable cost (cost minus salvage value) is depreciated.
How does straight-line depreciation differ from MACRS?
Straight-line is used for financial reporting (book depreciation) under GAAP. MACRS (Modified Accelerated Cost Recovery System) is used for US federal income tax purposes, and allows faster depreciation in early years. Most businesses maintain two separate depreciation schedules.
What is useful life?
Useful life is the period over which a business expects to use an asset productively. It is an estimate based on factors like wear and tear, obsolescence, and maintenance. IRS MACRS tables provide recovery periods by asset class for tax purposes.
Is straight-line depreciation the same every year?
Yes. The annual depreciation charge is identical every year under the straight-line method, which is why it is simple to apply and easy to budget. The book value of the asset decreases by the same amount each year until it reaches salvage value.
Official sources
- FASB ASC 360: Property, Plant, and Equipment.
- IRS Publication 946: How to Depreciate Property.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.