1. What is Straight-Line Depreciation?

Straight-line depreciation is the simplest method of allocating the cost of a tangible asset over its useful life. It assumes the asset will lose an equal amount of value each year.

2. How Does the Calculator Work?

The calculator uses the straight-line depreciation formula:

Where:

• \( \text{Cost} \) — Original purchase price of the asset
• \( \text{Salvage Value} \) — Estimated resale value at end of useful life
• \( \text{Useful Life} \) — Expected service life in years

Explanation: The formula spreads the depreciable amount (cost minus salvage value) evenly over the asset's useful life.

3. Importance of Depreciation Calculation

Details: Accurate depreciation calculation is essential for financial reporting, tax purposes, and understanding the true cost of asset ownership over time.

4. Using the Calculator

Tips: Enter the asset's original cost, estimated salvage value, and expected useful life in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: When should I use straight-line depreciation?
A: Straight-line is best for assets that lose value evenly over time, like office furniture or buildings.

Q2: What's the difference between cost and salvage value?
A: Cost is what you paid for the asset; salvage value is what you expect to recover when disposing of it.

Q3: How do I determine useful life?
A: Useful life depends on the asset type and usage. The IRS provides guidelines for tax purposes.

Q4: Can salvage value be zero?
A: Yes, if the asset will have no resale value at the end of its useful life.

Q5: Are there other depreciation methods?
A: Yes, methods like declining balance and sum-of-years'-digits accelerate depreciation in early years.