Straight-line depreciation
Objective: Calculate and record straight-line depreciation.
Recommended first: Capitalizing fixed assets, Contra accounts
Straight-line depreciation = (cost − salvage value) ÷ useful life. Monthly depreciation divides by months. When the amount does not divide evenly, this platform puts the extra cents in the earliest months so the schedule totals exactly.
Depreciation schedules make annual entries routine: list each year, the expense, accumulated depreciation, and book value. Book value should never fall below salvage value. When amounts do not divide evenly, apply a stated rounding rule; this platform places extra cents in the earliest months so the total is exact.
Check your work
- Is the depreciable base cost minus salvage?
- Is the credit to the contra account?
- Does the schedule total exactly?
Useful life and salvage value are estimates made when the asset is bought. If they change materially, introductory practice is to adjust future depreciation rather than rewrite the past; that topic is beyond this course.
Van cost $24,000, salvage $4,000, 5 years: $20,000 ÷ 5 = $4,000 per year.
| Account | Debit | Credit |
|---|---|---|
| Depreciation Expense | $4,000.00 | |
| Accumulated Depreciation – Vehicles | $4,000.00 |
Common mistakes
✗ Ignoring salvage value.
✓ Depreciate cost minus salvage.
Guided practice
Use hints freely here.
Item 1 of 1
Annual straight-line depreciation
FixRight Appliance Repair bought a van on January 1 for $26,000.00. It expects to use it for 4 years with a salvage value of $2,000.00, using straight-line depreciation. Record depreciation for the year ended Dec 31, 2026.
Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 6
Monthly depreciation on furniture
Northlight Design Studio's office furniture cost $3,240.00 with no salvage value and a 36-month useful life (straight-line). Record one month's depreciation at Mar 31, 2026.
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Key terms
- Straight-line depreciation
- Equal depreciation each period.
- Salvage value
- Estimated value at the end of an asset's useful life.
- Useful life
- How long an asset is expected to be used.
References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.