Linear Depreciation Calculator

Formula

To calculate the linear depreciation:

\[ D = \frac{C - R}{N} \]

Where:

$D$ is the annual depreciation expense ($)
$C$ is the initial cost of the asset ($)
$R$ is the residual value of the asset at the end of its useful life ($)
$N$ is the useful life of the asset (in years)

What is Linear Depreciation?

Linear depreciation is a method of allocating the cost of a tangible asset over its useful life in a straight-line manner. It assumes the asset will decrease in value at a constant rate over its life. This is the most commonly used method of depreciation due to its simplicity. The depreciation expense is the same for each year of the asset’s life.

Example Calculation 1

Let's assume the following values:

Initial Cost ($C$) = $10,000
Residual Value ($R$) = $1,000
Useful Life ($N$) = 5 years

Using the formula:

\[ D = \frac{10000 - 1000}{5} = \frac{9000}{5} = 1800 \]

The Annual Depreciation Expense is $1,800.

Example Calculation 2

Let's assume the following values:

Initial Cost ($C$) = $20,000
Residual Value ($R$) = $2,000
Useful Life ($N$) = 10 years

Using the formula:

\[ D = \frac{20000 - 2000}{10} = \frac{18000}{10} = 1800 \]

The Annual Depreciation Expense is $1,800.