Book Value Formula Straight Line Method

The formula used to calculate the net book value of the assets is as below.

Book value formula straight line method. Depreciation per annum cost of asset salvage cost depreciation rate or. Straight line depreciation is the most commonly used and easiest method for allocating depreciation of an asset. Straight line method slm according to the straight line method the cost of the asset is written off equally during its useful life.

The formula for the straight line depreciation method is quite straightforward and very easy to calculate. B p p s t n where. Annual depreciation 2000 500 5 years 1 500 5 years 300.

After the useful life of the asset its value becomes nil or equal to its residual value. The formula for calculating book value. B book value over a period of time p present amount or worth.

This method was created to reflect the consumption pattern of the underlying asset. With the straight line method the annual depreciation expense equals the cost of the asset minus the salvage value divided by the useful life of years. Depreciation per year cost of asset salvage value useful life of asset.

Book value residual value x depreciation rate. Book value of fixed assets is the original cost of fixed assets including another necessary cost before depreciation. According to straight line depreciation your macbook will depreciate 300 every year.

The ddb rate of depreciation is twice the straight line method. Net book value formula original purchase cost accumulated depreciation original purchase cost here means the purchase price of the asset paid at the time when the company purchased the assets. You then find the year one depreciation by multiplying the 270 000 book value by 50 to get 135 000.