Practical of straight line depreciation in excel | 2020

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How to calculate Straight Line Depreciation in Microsoft Excel?
In straight-line depreciation method, cost of a fixed asset is reduced uniformly over the useful life of the asset. Since the depreciation expense charged to income statement in each period is the same, the carrying amount of the asset on balance sheet declines in a straight line.
Due to its simplicity, the straight-line method of depreciation is the most common depreciation method. Generally-accepted accounting principles (GAAP) require companies to depreciate its fixed assets using method that best reflects the pattern in which the assets are expected to generate economic benefits. While the straight-line method is appropriate in most cases, some fixed assets lose more value in initial years. In such situations accelerated depreciation method are more appropriate.

Formula
Depreciation Expense for a year under the straight-line method is calculated by dividing the depreciable amount (the difference between cost and salvage value) of the fixed asset by its useful life (in years).
Straight Line Depreciation Expenses = Depreciable amount / Useful Life of Asset
Depreciable amount equals cost minus salvage value.
Straight Line Depreciation Expenses = Cost − Salvage Value / Useful Life of Asset

Cost is the amount at which the fixed asset is capitalized initially on balance sheet on its acquisition. Salvage value (also called residual value or scrap value) is the estimated value of the fixed asset at the end of its useful life. Since an amount equal to the salvage value can be recovered by selling the asset, only the difference between the cost and the salvage value is depreciated. Useful life of a fixed asset represents the number of accounting periods within which the asset is expected to generate economic benefits.
Annual depreciation rate under the straight-line equals 1 divided by the useful life.
Normally purchase of fixed assets does not coincide with the start of financial year. In such situations, some companies elect to charge the whole-year depreciation to income statement in the year of purchase and do not charge any depreciation expense in the year of disposal. Another method which is more appropriate is to charge proportionate depreciation for partial year which is calculated using the following formula:
Straight-Line Depreciation Expense for Partial Year = D x N / 12
Where
D is the depreciation expense for a complete financial year.
N is the number of months during which the fixed asset was available for use.
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