1. What Is Straight-Line Depreciation?

Straight-line depreciation is the simplest and most commonly used method for allocating the cost of a capital asset over its useful life. It assumes the asset will lose the same amount of value each year.

2. How Does The Calculator Work?

The calculator uses the straight-line depreciation formula:

Where:

• \( Cost \) — Original purchase price of the furniture ($)
• \( Useful\ Life \) — Expected lifespan of the furniture in years

Explanation: This method evenly distributes the cost of the furniture over its estimated useful life, providing a consistent annual depreciation expense.

3. Importance Of Depreciation Calculation

Details: Calculating depreciation is essential for accurate financial reporting, tax deductions, and understanding the true cost of business assets over time. It helps businesses properly account for the wear and tear of furniture used for business purposes.

4. Using The Calculator

Tips: Enter the original cost of the furniture in dollars and the expected useful life in years. Both values must be positive numbers (cost > 0, useful life ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: What is considered a typical useful life for business furniture?
A: The useful life varies by furniture type and quality, but typically ranges from 5-10 years for office furniture according to IRS guidelines.

Q2: Can I use this method for tax purposes?
A: Yes, straight-line depreciation is an accepted method for tax purposes, but consult with a tax professional for specific regulations in your area.

Q3: What if my furniture has a salvage value?
A: The basic formula shown calculates depreciation without salvage value. For assets with salvage value, the formula is: (Cost - Salvage Value) / Useful Life.

Q4: How does depreciation affect my business finances?
A: Depreciation reduces your taxable income while accurately reflecting the decreasing value of your assets on balance sheets.

Q5: Can I change depreciation methods later?
A: Generally, you should consistently use the same depreciation method for each asset class, though special circumstances may allow changes with proper justification.