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Straight-line depreciation

Straight-line depreciation spreads the loss in value of an asset evenly over its lifetime, so the same amount is deducted from book value each year. It is based on the investment cost minus the expected residual value at the end of its life.

D = \frac{I - R}{n}

annual depreciation

Symbols

$I$	investment cost	kr
$R$	residual value at end of life	kr
$n$	useful life	years
$D$	annual depreciation	kr

Example

Machine costing 100,000 kr, residual value 50,000 kr, life 4 years:

$D = (100000 - 50000)/4 = 12.500$ kr per year.

Straight-line depreciation gives the same amount each year — unlike declining-balance depreciation, which deducts a percentage of the remaining value.

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