SLN (Straight-Line Depreciation)
Calculates the straight-line depreciation of an asset over a specified period. This method allocates an equal amount of depreciation expense each year, making it the simplest and most commonly used depreciation method for financial reporting and tax purposes.
SLN(cost, salvage, life)Arguments
costThe initial cost of the asset, including all expenses necessary to prepare the asset for use (e.g., purchase price, taxes, delivery, setup).salvageThe estimated value of the asset at the end of its useful life (also known as residual value). This is the amount the asset can be sold for after it is no longer useful to the business.lifeThe number of periods (usually years) over which the asset is expected to be useful. This is also known as the asset's useful life.
=SLN(10000, 1000, 5)A $10,000 asset with a $1,000 salvage value over 5 years depreciates by $1,800 annually. Calculation: (10000 - 1000) / 5 = 1800.
=SLN(50000, 5000, 10)A $50,000 asset with a $5,000 salvage value over 10 years depreciates by $4,500 annually. Calculation: (50000 - 5000) / 10 = 4500.
- •SLN is ideal for assets that depreciate evenly over time, such as buildings or furniture.
- •For tax purposes, some jurisdictions may require or allow accelerated depreciation methods (e.g., DB or DDB) instead of SLN.
- •The result of SLN is the same for each period, making it easy to plan and budget for depreciation expenses.
- •SLN does not account for the time value of money; it is purely a linear allocation of cost.
- •Using SLN for an asset that actually loses value faster in its early years, when an accelerated method like DB or DDB would better reflect its real depreciation pattern
- •Forgetting that SLN produces the same depreciation amount for every period, so calling it repeatedly with different period arguments is unnecessary - the result never changes
- •Mixing up cost and salvage, which produces a nonsensical (or negative) depreciation amount if salvage is entered larger than cost by mistake
DBUses a fixed-declining balance instead of SLN's flat, equal-per-period depreciation, resulting in larger deductions earlier in the asset's life.DDBAn even more accelerated declining-balance method than DB, contrasting sharply with SLN's steady, linear approach.SYDAnother accelerated method, front-loading depreciation more than SLN but less aggressively than DDB.Does SLN's result change depending on which period I'm calculating?
No, that's the whole point of straight-line depreciation - SLN returns the same amount for every period, since it simply divides total depreciable value evenly across the asset's life.
When should I use SLN instead of an accelerated method like DB?
SLN fits assets that lose value at a roughly constant rate over time, like buildings or furniture. Use DB or DDB instead for assets, like vehicles or electronics, that lose most of their value early on.
What happens if salvage is greater than cost?
SLN returns a negative number, which doesn't make practical sense for depreciation - double check that cost and salvage weren't accidentally swapped.
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