Use this template to keep track of the straight-line depreciation schedule for assets in your business.
Use this template to keep track of the straight-line depreciation schedule for assets in your business. Add your asset name, serial/barcode number, the cost for the asset, salvage value and useful life in years and the template will calculate the straight-line annual and monthly depreciation.
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Straight-line depreciation is a method used to calculate the amount of depreciation expense that should be charged over the life of an asset. This method assumes that the asset will depreciate evenly over its life, and is the simplest and most commonly used form of depreciation. The straight-line formula can be applied to any type of asset, whether it’s tangible (such as machinery) or intangible ( such as copyrights).
The formula for calculating straight-line depreciation is:
Depreciation Expense = (Cost of Asset – Salvage Value) ÷ Estimated Useful Life of the Asset in Years
For example, if a company bought a machine for $100,000 with an expected salvage value of $10,000 after 5 years, the depreciation expense would be calculated as follows :
Depreciation Expense = ($100,000 – $10,000) ÷ 5 years = $18,000 per year The depreciation expense calculated above would be charged to the income statement for each year of the machine’s life.
It is important to note that the straight-line method does not take into account any changes in the value of an asset over time. In some cases, an asset may be more valuable at the end of its useful life than it was at the beginning. This type of appreciation cannot be accounted for using the straight-line approach, so other methods such as double declining balance or sum-of -the-years’-digits may be more appropriate.
Depreciation is an important concept in accounting and finance, as it allows companies to spread the cost of the purchase of an asset over its entire useful life. This can be beneficial for businesses that may not have the capital available to pay for an asset in full at once. By spreading out the cost, depreciation helps businesses reduce their taxable income and maximize their cash flow. Depreciation also helps accountants to match the cost of an asset to the revenue it generates, by writing off a portion of the cost in each period that it is used.
A depreciation schedule is a document that outlines the expected amount of depreciation expense to be charged for an asset over its useful life. It lists the estimated cost of the asset, its salvage value, and its useful life in years, and calculates the annual depreciation expense using the straight-line formula. The schedule can be used to plan for future expenses, as well as track past expenditures for tax purposes.