Straight-line depreciation, one step at a time
Spread an asset’s cost over its useful life
Try the interactive lessonLet’s make it simple.
Depreciation spreads the cost of a long-lived asset over its useful life. Straight-line depreciation = (Cost − Residual value) ÷ Useful life.
Picture this.
A $1,200 laptop with a $200 residual value lasts 5 years. Annual depreciation is ($1,200 − $200) ÷ 5 = $200.
Check your understanding
A laptop costs $1,200, has a $200 residual value, and lasts 5 years. What is annual straight-line depreciation?
Think it through, then reveal the explanation
($1,200 − $200) ÷ 5 = $200 each year. Depreciation expense rises; accumulated depreciation reduces the asset’s carrying amount.
Build the bigger picture.
- Find the purchase cost
- Subtract residual value
- Divide by useful life
- Record annual depreciation
Build the straight-line calculation one step at a time.
Now make it move.
Bring this idea to life with interactive practice, a 3D illustration and tips along the way. Your progress stays on your device.
Practice Depreciation