What is straight-line depreciation?
When a business buys equipment, it doesn't count the whole cost in one year — it spreads it across the years the asset is used. Straight-line is the simplest way to do that, and by far the most common.
Skip the math — the free straight line depreciation calculator runs this from your own figures.
Open the free calculator →Why depreciate at all
A machine, vehicle, or computer helps earn money for years, so accounting matches its cost to those years rather than dumping it all into the year of purchase. That gives a truer picture of profit each year and is required for most business assets.
Depreciation is that matching process: it gradually moves an asset's cost from the balance sheet to the income statement as an expense over the asset's useful life.
The straight-line formula
Straight-line depreciation spreads the cost evenly. Annual depreciation = (asset cost − salvage value) ÷ useful life in years.
The salvage value is what you expect the asset to be worth at the end. You only depreciate the part of the cost you actually use up, so salvage is subtracted first.
A worked example
Buy a $30,000 asset with a $3,000 salvage value and a 5-year life. The depreciable amount is $27,000, so annual depreciation is $27,000 ÷ 5 = $5,400 a year.
Each year the asset's book value drops by $5,400: from $30,000 to $24,600 after year one, and so on, until it reaches the $3,000 salvage value at the end of year five.
Why 'straight-line' and when to use it
It's called straight-line because the depreciation is the same every year, so book value falls in a straight line. It suits assets that lose value steadily and are used evenly over time — furniture, buildings, and much equipment.
Other methods (like declining-balance) front-load depreciation for assets that lose value fastest early on. Straight-line wins on simplicity and is the default for most small-business assets.
Putting it to work
A depreciation schedule lists each year's depreciation, the accumulated total, and the remaining book value — useful for accounts, tax, and planning replacements.
The free calculator below gives you annual and monthly straight-line depreciation from your own numbers, and the full schedule builds the year-by-year book value for every asset.
Questions
Is depreciation the same as a tax deduction?
They're related but not identical. Depreciation is an accounting expense that reduces reported profit, and in many tax systems you can deduct depreciation (sometimes under specific rules or accelerated schedules that differ from your accounting method). The exact tax treatment — rates, methods, and any immediate-expensing allowances — varies by country, so use straight-line for a clear accounting view and check the specific tax rules that apply to you.
What's the difference between depreciation and amortization?
They're the same idea applied to different assets. Depreciation spreads the cost of tangible assets — equipment, vehicles, buildings. Amortization spreads the cost of intangible assets — software, patents, goodwill. Both allocate a cost over a useful life, and straight-line is commonly used for each; the term just changes with the type of asset.