Straight-Line Depreciation
Also called: SLM, straight line method
What is Straight-Line Depreciation?
Straight-line depreciation charges an equal amount every year over an asset's useful life, after allowing for any expected salvage value. It is the simplest and most widely used method.
Why Straight-Line Depreciation matters
Equal annual charges make budgeting and comparison easy, and suit assets that are used steadily — furniture, fit-outs, buildings and most kitchen equipment.
Straight-Line Depreciation formula
Annual depreciation = (Cost − Salvage value) ÷ Useful life
Book value declines in a straight line to the salvage value.
How Straight-Line Depreciation works in practice
Estimate useful life honestly rather than optimistically. Setting a long life to protect current profit only defers the correction to a later write-off.
Worked example
₹1,20,000 of furniture with no salvage value over 10 years is ₹12,000 a year.
Frequently asked questions
For assets that lose value fastest early on, such as vehicles and computers, where written-down value fits better.