SLN
Returns the depreciation of an asset in a single period using the straight-line depreciation method.
Syntax:
SLN(originalcost, salvagevalue, lifetime)
originalcost: the initial cost of the asset.
salvagevalue: is the value at the end of the depreciation (sometimes called the salvage value of the asset).
lifetime: the number of periods (commonly years) over which the asset is being depreciated.
The straight-line depreciation method depreciates the asset by the same constant value every period; that value is returned by the SLN function. The formula is:
( originalcost - salvagevalue ) / lifetime.
Example:
SLN(14000, 4000, 5)
returns 2000 in currency units. The asset depreciates 2000 in each of the 5 years of its working life.
Application:
Let's imagine a small business, "Creative Designs," that purchases a new large-format printer for their office.
- Cost: The printer costs $15,000.
- Salvage Value: After 5 years, the company expects to sell the printer for parts or scrap, with an estimated value of $1,000.
- Useful Life: The expected useful life of the printer is 5 years.
Using the SLN function, the annual depreciation is calculated as follows:
This means that the printer will depreciate by a fixed amount of $2,800 each year for 5 years.
Depreciation Table
The following table shows the annual depreciation schedule for the printer using the SLN function.
Year | Beginning Book Value | Depreciation Expense | Accumulated Depreciation | Ending Book Value | ||
|---|---|---|---|---|---|---|
A | B | C | D | E | ||
1 | 1 | $15,000.00 | $2,800.00 | $2,800.00 | $12,200.00 | |
2 | 2 | $12,200.00 | $2,800.00 | $5,600.00 | $9,400.00 | |
3 | 3 | $9,400.00 | $2,800.00 | $8,400.00 | $6,600.00 | |
4 | 4 | $6,600.00 | $2,800.00 | $11,200.00 | $3,800.00 | |
5 | 5 | $3,800.00 | $2,800.00 | $14,000.00 | $1,000.00 |
As you can see from the table, the depreciation expense remains the same each year. At the end of year 5, the accumulated depreciation equals the initial cost minus the salvage value ($15,000 - $1,000 = $14,000), and the ending book value of the asset is equal to its salvage value ($1,000).
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