Details

Straight Line (SL)

This method assumes a constant depreciation value per year.

Assuming that the price of a depreciating asset is P and its salvage value after N years is S, the annual depreciation is:

\[ \frac{P-S}{N} \]

For our example, the annual depreciation would be

\[ \frac{\$ 20,000-\$ 5,000}{5}=\$ 3,000 \]