Straight line depreciation is a method of calculating depreciation based on the principle that an asset loses an equal amount of value each year. Straight line depreciation is the most commonly used depreciation method.
Datastream 7i determines the value of straight line depreciation by calculating the difference between the purchase price of an asset (Original value) and the salvage value (Residual value), and then dividing that difference by the estimated useful life of the asset (in days).
Datastream 7i calculates annual straight line depreciation expense based the following formula:
(Original value – Residual value) / Estimated useful life in years = Daily depreciation expense
After determining the daily depreciation expense for the asset, Datastream 7i uses the daily depreciation value to calculate the depreciation expense and the book values for each subsequent period of the asset’s useful life during each of the fiscal years you have defined or until the Sold/scrapped date, whichever comes first. No further depreciation is calculated for the asset after the Sold/scrapped date nor after the depreciation causes the Book value of the asset to reach its Residual value.
When entering depreciation data for straight line depreciation, select Straight line as the Depreciation method, and then enter values for Original value, Estimated useful life, the unit of measure, and Residual value.