Calculate straight-line depreciation
Allocate an asset's depreciable amount evenly over its estimated useful life and check the carrying amount.
Cambridge International AS & A Level Accounting 9706, 2026–2028 syllabus, Version 2. These lessons cover Topic 1.3 only. Practice is self-checked, not an official Cambridge grade; the separately published 2029 syllabus, timed papers and human subject-teacher review remain outstanding.
Before you begin
- Topics 1.1 and 1.2 introduce business resources, equity, double entry and period profit. Use those ideas when recording non-current assets.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
What is the first amount needed for a straight-line calculation when residual value is given?
What you will learn
- Calculate straight-line depreciation
- Find accumulated depreciation and carrying amount
- State assumptions behind a time-based charge
Spread the depreciable amount evenly
Under straight-line depreciation, the same amount is charged in each full accounting period if the useful-life and residual-value estimates remain unchanged. A common calculation is (cost − estimated residual value) ÷ useful life.
If a percentage of cost is specified, apply that rate to cost each period. State whether the question uses a full-year charge or a time-apportioned charge for part of a year.
Keep cost, accumulated depreciation and carrying amount distinct
Accumulated depreciation is the total charge recorded up to a date. Carrying amount under the cost model is cost less accumulated depreciation and any impairment or other required adjustment.
The carrying amount is not necessarily the cash that the asset could be sold for. Use the amount and convention requested in the question.
Pause and explain
A machine cost $16,000, has no residual value and a four-year useful life. What is carrying amount after two full years under the cost model?
Worked example
Equipment costs $25,000, has an estimated residual value of $1,000 and a useful life of six years. Calculate one full year's straight-line depreciation and its carrying amount after two years.
Show the worked solution
- Depreciable amount = 25,000 − 1,000 = $24,000.
- Annual charge = 24,000 ÷ 6 = $4,000.
- After two years, accumulated depreciation = $8,000; carrying amount = $25,000 − $8,000 = $17,000.
Answer Annual depreciation is $4,000. After two full years, accumulated depreciation is $8,000 and carrying amount is $17,000.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A computer costs $9,600, residual value is $600 and useful life is five years. Find annual straight-line depreciation.
Give me a hint
Subtract residual value before dividing by years.
Compare my reasoning
- Depreciable amount = 9,600 − 600 = $9,000.
- Annual depreciation = 9,000 ÷ 5.
- Check that five charges total the depreciable amount.
$1,800 per year; five charges total $9,000.
Look for these in your work
- Depreciable amount correct
- Annual charge correct
- Total checked
An asset costs $40,000 and is depreciated straight-line at 10% of cost annually. Find the charge for three months if the business time-apportions.
Give me a hint
Calculate the annual amount, then apply 3/12.
Compare my reasoning
- Annual charge = 40,000 × 10% = $4,000.
- Three-month charge = 4,000 × 3/12.
- Use $1,000 for the three months.
$1,000, assuming time-apportionment is required and the asset was in use for all three months.
Look for these in your work
- Annual amount calculated
- Time fraction applied
- Assumption stated
A business is offered two estimates for an asset: six-year useful life with $2,000 residual value, or four-year life with no residual value. Cost is $26,000. Compare annual straight-line charges and explain why the estimate matters.
Give me a hint
Calculate each depreciable amount and divide by its useful life.
Compare my reasoning
- Option A: (26,000 − 2,000) ÷ 6 = $4,000 per year.
- Option B: 26,000 ÷ 4 = $6,500 per year.
- The shorter life/no residual assumption charges $2,500 more each year and changes reported profit and carrying amount.
Option A gives $4,000 a year; Option B gives $6,500 a year. Estimates affect annual expense and carrying amount, so they should reflect supportable expectations rather than a desired profit.
Look for these in your work
- Both calculations correct
- Difference identified
- Estimate quality considered
Common mistakes
- Subtracting residual value twice
- Using useful life as the annual charge without first finding depreciable amount
- Confusing accumulated depreciation with the carrying amount
What can you explain now?
A $12,000 asset has no residual value and a four-year life. What is its annual straight-line charge?
Compare with the explanation
$3,000
Divide depreciable amount $12,000 by four years.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Write the straight-line formula and state how you find carrying amount under the cost model.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.