Download PDF of Solve example For Straight-Line Method

 Welcome back to our blog in today's post we are going to solve an annual depreciation expense example by straight-line method. Well straight-line depreciation method is quite famous this method is used to allocate the cost of a long-term asset evenly over its estimated useful life.

Straight-Line Depreciation Formula

Annual Depreciation Expense = (Cost of Asset - Salvage Value) / Useful Life

Now let's calculate annual depreciation expense using the straight-line method of depreciation

 Example For Straight-Line Depreciation Method

• Example :1 

Company XYZ purchases a piece of machinery for 20,000. The machinery has an estimated useful life of 5 years and no salvage value (meaning it's expected to have no value at the end of its useful life). Calculate the annual depreciation expense.

• Step 1:- Use the formula

Formula:- Annual Depreciation Expense = (Cost of Asset - Salvage Value) / Useful Life

• Step 2:- Now calculate the values

Annual Depreciation Expense = 20,000 / 5 years

Annual Depreciation Expense = 4,000 per year

So, the annual depreciation expense for the machinery is 4,000. 

• Example 2: 

Company ABC purchases a delivery van for 25,000 INR with an estimated useful life of 4 years and no expected salvage value. They want to calculate the annual depreciation expense for the van.

You can solve this example using straight-line depreciation methods.

Conclusion

Here in this post, we add some examples of straight-line depreciation methods so if you are an accounting student then you should read this pot till the end.