Straight Line Method Amortization Calculator
Calculate straight line depreciation instantly. Enter your asset cost, salvage value, and useful life to generate a full depreciation schedule you can export to Excel.
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Straight Line Depreciation Formula
The straight line depreciation formula evenly distributes an asset's depreciable cost over its useful life. It is the simplest and most widely accepted method in both GAAP and IFRS accounting.
Salvage Value Formula
The salvage value (also called residual value or scrap value) is the estimated worth of an asset at the end of its useful life depreciationperiod. It reduces the total depreciable base.
IRS rules generally do not allow you to depreciate an asset below its estimated salvage value. For MACRS purposes, salvage value is treated as zero.
How to Calculate Accumulated Depreciation
Accumulated depreciation is the total depreciation recognized from the asset's in-service date to any given point in time. It is a contra-asset account on the balance sheet.
Book Value at any point = Asset Cost − Accumulated Depreciation
Rates of Depreciation — Straight Line Chart
The depreciation rate under the straight line method is constant each year. Below is a Straight Line Depreciation Chart showing common rates by useful life:
| Useful Life | SL Rate / Year | Common Asset Classes |
|---|---|---|
| 3 years | 33.33% | Small tools, racehorses |
| 5 years | 20.00% | Computers, vehicles, research equipment |
| 7 years | 14.29% | Office furniture, most business equipment |
| 10 years | 10.00% | Certain farm buildings, water transportation |
| 15 years | 6.67% | Land improvements, shrubbery |
| 20 years | 5.00% | Farm buildings, utilities infrastructure |
| 27.5 years | 3.64% | Residential rental real estate |
| 39 years | 2.56% | Commercial real estate, nonresidential buildings |
Useful Life Depreciation Explained
Useful life is the estimated period over which a business expects to use an asset productively. The IRS provides standard useful lives under MACRS. Taxpayers using GAAP may estimate their own useful lives based on physical wear and economic factors.
Key factors that determine useful life include: physical deterioration, technological obsolescence, legal limitations, and economic conditions. Choosing the correct useful life is critical for accurate IRS Form 4562 filing.