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Straight-Line Depreciation Method

When this method is used, a fixed asset is depreciated by the same amount each year.

When using the straight-line method, you must specify one of the following options in the FA depreciation book:

  • The depreciation period (years or months) or a depreciation ending date

  • A fixed yearly percentage

  • A fixed yearly amount

  • Depreciation period

Depreciation Period

If you enter the depreciation period (number of depreciation years, the number of depreciation months or the depreciation ending date), the program uses this formula to calculate the depreciation amount:

Depreciation Amount = ((Book value - Salvage Value) * Number of Depreciation Days) / Remaining Depreciation Days

Remaining depreciation days are calculated as the number of depreciation days minus the number of days between the depreciation starting date and the last FA entry date.

Book value may be reduced by posted appreciation, write-down, custom 1 or custom 2 amounts, depending on whether the Include in Depr. Calculation field is deactivated and whether the Part of Book Value field is activated in the FA Posting Type Setup window.

This calculation ensures that the fixed asset is fully depreciated at the depreciation ending date.

Fixed Yearly Percentage

If you enter a fixed yearly percentage, the program uses this formula to calculate the depreciation amount:

Depreciation Amount = (Straight-Line % * Depreciable Basis * Number of Depr. Days) / (100 * 360)

Fixed Yearly Amount

If you enter a fixed yearly amount, the program uses this formula to calculate the depreciation amount:

Depreciation Amount =(Fixed Depreciation Amount * Number of Depreciation Days) / 360

For an example, see Example - Straight-Line Depreciation for more information.

See Also

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