Straight Line Method

A company purchase a machine of Rs 100000/= with estimated salvage value Rs 20000/=

and useful life of years.

Cost of Assets Rs 100000/=

Salvage Value Rs 20000/=

Useful Life 5 Years

Cost – Salvage value + Total Depreciable cost

100000 – 20000 = 80000

Formula: Cost – Salvage Value

Number of Years

100000-20000
5
80000 = 16000
5
Year Opening Book Value Depreciation Ending Book Value
1st 100000 16000 84000
2nd 84000 16000 68000
3rd 68000 16000 52000
4th 52000 16000 36000
5th 36000 16000 20000 Salvage Value

 If the scrap value is 0 then the ending book value will be 0.

 If the scrap value is given then the ending book value will be equal to the scrap value.