The simplest and most commonly used depreciation method, straight line depreciation is calculated by taking the purchase or acquisition price of an asset subtracted by the salvage value divided by the total productive years the asset is expected to benefit the organization.
Example: A new machine is purchased, costing $5000. You expect a salvage value of $200 selling parts when it is decommissioned. The machine is expected to be kept in operation for 5 years. Using this information,
($5000 - $200) / 5 years = $ 960 annual depreciation expense