Topic: Fixed asset depreciation straigtht line

Dear all , i am trying to depreciate my fixed asset using straight line, but the depreciation value is not correct according to the method and percentage.

e.g i have and asset value of 20,000 with depreciation of 5% straight line, after depreciation the value must be 19,000 but instead it giving lesser value

anybody can help explain how depreciation works a bit more?
Does the tax affect the amount in the depreciation? @joe


Re: Fixed asset depreciation straigtht line

You have not given proper detail for us to check. Posts which are not answered or not fixed means the person who doesn't provide enough information to understand a situation to fix it.

Explain it a bit clear, How it has to work ?

And provide a sample of calculation  and formula we have to use it for the calculation

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Re: Fixed asset depreciation straigtht line

Straight line basis is calculated by dividing the difference between an asset's cost and its expected salvage value by the number of years it is expected to be used.

To calculate straight line basis, take the purchase price of an asset and then subtract the salvage value, its estimated sell-on value when it is no longer expected to be needed. Then divide the resulting figure by the total number of years the asset is expected to be useful, referred to as the useful life in accounting jargon.

    Straight Line Basis = (Purchase Price of Asset - Salvage Value) / Estimated Useful Life of Asset

Example scenario below
Assume that Company A buys a piece of equipment for $10,500. The equipment has an expected life of 10 years and a salvage value of $500. To calculate straight line depreciation, the accountant divides the difference between the salvage value and the cost of the equipment—also referred to as the depreciable base or asset cost—by the expected life of the equipment.

The straight line depreciation for this piece of equipment is ($10,500 - $500) / 10 = $1,000. This means that instead of writing off the full cost of the equipment in the current period, the company only needs to expense $1,000. The company will continue to expense $1,000 to a contra account, referred to as accumulated depreciation, until $500 is left on the books as the value of the equipment.

@notrinos @joe @kvvaradha