Straight Line Depreciation Examples

Straight Line Depreciation Examples

Example 1

1. straight line depreciation

Cost of asset = $100,000
Estimated residual value = $10,000
Estimated useful life of asset = 5 years = 60 months

Depreciation base = cost - residual value
= $100,000 - $10,000 = $90,000

Depreciation amount for each year
= (cost - residual value) x 1 / useful life
= ($100,000 - $10,000) x 1 / 5 years
= $90,000 / 5 = $18,000 per year

Depreciation amount for each month
= (cost - residual value) x 1 / useful life
= ($100,000 - $10,000) x 1 / 60 months
= $90,000 / 60 = $1,500 per month


Example 2

2. straight line depreciation

Cost of asset = $800,000
Estimated residual value = 10% of the cost
Estimated useful life of asset = 10 years = 120 months

Depreciation base = cost - residual value
= $800,000 - $80,000 = $720,000

Depreciation amount for each year
= (cost - residual value) x 1 / useful life
= ($800,000 - $80,000) x 1 / 10 years
= $720,000 / 10 = $72,000 per year

Depreciation amount for each month
= (cost - residual value) x 1 / useful life
= ($800,000 - $80,000) x 1 / 60 months
= $720,000 / 120 = $6,000 per month