Straight-line depreciation
In one sentenceA depreciation method that spreads an asset's cost less its residual value evenly over the years of its useful life, so the depreciation expense is the same every year.
Simply put
The simplest and most widely used depreciation method: you subtract the residual value from the cost and divide the result by the number of years. The result is a fixed amount every year.
It suits assets you benefit from to roughly the same extent every year, such as buildings and furniture.
Worked example
A delivery business bought a car for 120,000 SAR and expects to use it for 5 years and then sell it for 20,000 SAR.
Depreciable amount: 120,000 − 20,000100,000 SAR
Useful life5 years
Annual depreciation: 100,000 ÷ 520,000 SAR
Formula: (Cost − Residual value) ÷ Useful life
Don't confuse it with
Declining balance depreciationDeclining balance charges more depreciation in the early years and then less, while straight-line is equal every year.
in FullScreen ERP
The system supports the straight-line and declining-balance methods according to the asset's category. Fixed assets