Straight-line depreciation spreads an asset's depreciable cost evenly over its useful life. Each full year carries the same charge, so the asset's net book value falls in a straight line from cost to salvage value. It is the default book method for most organizations because it is simple, easy to audit and fits assets that deliver roughly the same benefit every year.
The formula
Worked example
A company buys a forklift for $30,000 (including delivery). It expects to use it for 5 years and sell it for about $5,000 at the end.
| Year | Opening NBV | Depreciation | Accumulated depreciation | Closing NBV |
|---|---|---|---|---|
| 1 | $30,000 | $5,000 | $5,000 | $25,000 |
| 2 | $25,000 | $5,000 | $10,000 | $20,000 |
| 3 | $20,000 | $5,000 | $15,000 | $15,000 |
| 4 | $15,000 | $5,000 | $20,000 | $10,000 |
| 5 | $10,000 | $5,000 | $25,000 | $5,000 |
Partial first year
Assets rarely arrive on the first day of the financial year. A common approach is to prorate by month. If the forklift is placed in service on 1 April in a January–December year, year 1 includes 9 months:
Other conventions exist — for example a half-year convention that gives every asset six months in its first year — and tax rules often prescribe which one to use.
Changing the estimates
Useful life and salvage value are estimates, and they should be reviewed. When they change, you do not rewrite the past — the remaining book value is spread over the remaining life from now on.
When straight-line is (and is not) a good fit
| Good fit | Less suitable |
|---|---|
| Assets used evenly over time — furniture, buildings, office equipment | Assets that lose most of their value or productivity early — some vehicles and tech |
| When simplicity and comparability matter | Assets whose wear tracks usage rather than time — consider units of production |
| Most book reporting | Tax returns where accelerated methods are required or allowed |
Straight-line vs accelerated methods
Declining balance, double-declining balance and sum-of-years' digits all depreciate the same total but charge more in the early years. On the same $30,000 forklift, DDB would charge $12,000 in year 1 versus $5,000 under straight-line. The total over the life is identical — $25,000 — only the timing changes.
Try the numbers yourself in our free depreciation calculator.
Straight-line depreciation in Asetavo
In Asetavo you set cost, salvage value, useful life and in-service date on an asset (or as defaults on its category), choose straight-line, and Asetavo builds the schedule. Runs are computed as drafts for review and then posted; posting updates NBV and accumulated depreciation, and a separate tax profile can use a different method without touching book values.