MathLiveStraight-line depreciation
Spreads the cost of a fixed asset evenly over its useful life, after subtracting its residual value, giving the depreciation expense charged each year. It is the simplest method used in financial accounting.
\mathrm{Annual\ Depreciation\ Expense} = \frac{\mathrm{Cost\ of\ Fixed\ Asset} - \mathrm{Residual\ Value}}{\mathrm{Useful\ Life\ of\ Asset}\ (\mathrm{years})}What the symbols mean
| original purchase cost of the asset (currency) | |
| estimated value of the asset at the end of its useful life (currency) | |
| number of years the asset is expected to be used (years) |
About this formula
- FieldEconomics and finance
- TopicAccounting
- LevelUniversity
- Also calledannual depreciation expense, depreciation formula, depreciation expense per year, asset depreciation, residual value depreciation
- SourceWikidata Q114403
Write it in Obsidian
MathLive is a free visual math editor for Obsidian. Run Find a formula, type “straight-line depreciation”, and it goes into your note as editable LaTeX. You can also scan formulas from screenshots, PDFs and handwriting.