When is straight-line depreciation required?

Straight-line is required for GAAP book depreciation in most cases, intangible assets, and buildings. It spreads cost evenly over the asset useful life.

Example: $50,000 asset, $5,000 salvage value, 10-year life

Annual depreciation = ($50,000 - $5,000) / 10 = $4,500/year. Book value after 5 years = $50,000 - (5 x $4,500) = $27,500.

What is the half-year convention?

For tax purposes, MACRS applies a half-year convention in year 1 regardless of purchase date. For GAAP book purposes, companies typically record depreciation from the month placed in service.

Straight-Line Depreciation Calculator

Calculate annual depreciation using straight-line method: (Cost - Salvage Value) / Useful Life. The simplest and most widely used GAAP depreciation method.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How It Works

Calculate annual depreciation using straight-line method: (Cost - Salvage Value) / Useful Life. The simplest and most widely used GAAP depreciation method

Each component has a specific meaning:

Straight-line method: / Useful Life — The straight-line method: / useful life recorded for the scenario being assessed.

Note: Interpret the straight-line depreciation result against the thresholds and context described above.

How to Use

Enter the straight-line method: / Useful Life for the scenario you are assessing. Calculate annual depreciation using straight-line method: (Cost - Salvage Value) / Useful Life. The simplest and most widely used GAAP depreciation method. Use the straight-line depreciation result to inform your calculation.

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Frequently Asked Questions

When is straight-line depreciation required?

Example: $50,000 asset, $5,000 salvage value, 10-year life

What is the half-year convention?