function calculateSLDepreciation() {
// Get input values strictly by ID
var assetCostInput = document.getElementById('assetCost');
var salvageValueInput = document.getElementById('salvageValue');
var usefulLifeInput = document.getElementById('usefulLife');
var resultDiv = document.getElementById('result');
// Parse values
var cost = parseFloat(assetCostInput.value);
var salvage = parseFloat(salvageValueInput.value);
var life = parseFloat(usefulLifeInput.value);
// Validation
if (isNaN(cost) || isNaN(salvage) || isNaN(life)) {
resultDiv.style.display = "block";
resultDiv.innerHTML = 'Please enter valid numeric values for all fields.';
return;
}
if (life cost) {
resultDiv.style.display = "block";
resultDiv.innerHTML = 'Salvage value cannot be greater than the asset cost.';
return;
}
// Calculations
// Formula: (Cost – Salvage) / Life
var depreciableAmount = cost – salvage;
var annualDepreciation = depreciableAmount / life;
// Rate calculation for Straight Line: (1 / Life) * 100
// Or (Annual Depreciation / Depreciable Amount) * 100
var depreciationRate = (1 / life) * 100;
var monthlyDepreciation = annualDepreciation / 12;
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
// Construct Result HTML
var htmlOutput = `
Depreciation Rate:${depreciationRate.toFixed(2)}% per year
Understanding How the Depreciation Rate is Calculated for the Straight-Line Method
Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. For accountants and business owners, understanding how to calculate this rate is crucial for accurate financial reporting and tax planning. The straight-line method is the most common and simplest technique used to calculate depreciation.
How is the Rate Calculated?
When asking "depreciation rate is calculated as what for straight-line method," the answer lies in the relationship between the asset's useful life and the total percentage of the asset's value (100%).
Unlike accelerated depreciation methods, the straight-line rate remains constant throughout the life of the asset. The formula for the rate itself is strictly a function of time:
Depreciation Rate (%) = (1 / Useful Life in Years) × 100
For example, if an asset has a useful life of 5 years, the rate is calculated as 1 divided by 5, which equals 0.20, or 20% per year.
The Straight-Line Depreciation Formula
To calculate the actual dollar amount of depreciation expense recorded annually, you apply the rate to the depreciable base, or use the standard expense formula:
Annual Expense = (Cost of Asset – Salvage Value) / Useful Life
Key Terms Defined:
Asset Cost: The total amount paid to acquire the asset, including taxes, shipping, and installation fees.
Salvage (Residual) Value: The estimated value of the asset at the end of its useful life. This is the amount you expect to sell it for as scrap or used equipment.
Useful Life: The estimated number of years the asset is expected to be productive for the business.
Example Calculation
Let's assume a business purchases a delivery truck for $50,000. They estimate the truck will last for 8 years and can be sold for $2,000 at the end of that period.
Calculate Annual Expense: $48,000 × 12.5% = $6,000 per year
Alternatively, using the direct formula: ($50,000 – $2,000) / 8 = $6,000.
Why Use the Straight-Line Method?
The straight-line method is favored for its simplicity and objectivity. It distributes the expense evenly, which is ideal for assets where economic benefits are consumed uniformly over time (like buildings or office furniture), rather than assets that lose value quickly in early years (like technology or vehicles).