Straight-Line depreciation is a method used to reduce the value of an asset, like a car, over time. It spreads the cost evenly across each year until the balance is zero.
If you're not sure which method to use, check with your accountant.
Cause
Resolution
Straight depreciation
The asset's value reduces by a fixed percentage of the cost price every year until it reaches zero.
Cost price £/€
Annual depreciation rate %
Annual depreciation amount £/€
New book value £/€
Year 1
10,000.00
25
2,500.00
7,500.00
Year 2
10,000.00
25
2,500.00
5,000.00
Year 3
10,000.00
25
2,500.00
2,500.00
Year 4
10,000.00
25
2,500.00
0
The Fixed Assets Register calculates Straight depreciation on a monthly basis using the following calculation:
Formula
Monthly depreciation value = Cost price x (Annual depreciation rate / 100) / 12
Excel formula
=Cost price*(Annual depreciation rate/100)/12
Example
Cost price
£/€10,000.00
Method
Straight
Annual depreciation rate
25%
Monthly depreciation = 10,000.00 x (25/100) / 12 = 208.33