# Depreciation method

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What are the difference between Straight Line Service Life and Straight Line Life Remaining?

Thanks.
• Kevin Xia on at
Depreciation method
Hi,
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Best regards,
Kevin
• Andre Arnaud de Cal... 282,938 Super User on at
Depreciation method
Hi STP,

There are already some valuable replies, but I would like to add some details here. I always show the formulas like below to directly show that the base for the depreciation is different

Straight line service life: (Acquisition value - Scrap value) / Total periods during service life

Straight line service remaining: (Net book value - Scrap value) / Remaining number of depreciation periods

Initially, the outcome will be the same in case there are no changes in value or remaining service life. In case you are e.g. halfway through the service life, there can be a change to the asset having an impact on the value or remaining service life. After such a change, the depreciation amounts are different for each of the methods.

In case the initial acquisition value was 40000 with a scrap value of 4000, the depreciation base is 36000. In this example, we can also use a lifetime of 3 years with 36 periods. In the first 18 months, the depreciation amount for both methods was 1000 per month. In case you post an additional acquisition value of e.g. 7200, then the following 18 months, the calculation will be:

Straight line service life: (47200 - 4000) / 36 = 1200

Straight line service remaining: (21200 ) / 18 = 1177,78

Also, in case you change the remaining number of periods, the outcome of both formulas is different.

• Kevin Xia on at
Depreciation method
Hi,
Straight Line Service Life: This method calculates depreciation based on the total service life of the asset. It evenly distributes the depreciable amount over the entire useful life of the asset. For details, please refer to the official documents provided by Billur.
Straight Line Life Remaining: This approach calculates depreciation based on the remaining useful life of the asset. You can refer to this official document: Straight line life remaining depreciation - Finance | Dynamics 365 | Microsoft LearnThis article gives an overview of the Straight line life remaining method of depreciation.
Best regards,
Kevin
• Ramit Paul 18,188 Super User on at
Depreciation method

The main difference between the two methods is how they calculate the depreciation amount in each period.
- Straight Line Service Life uses the total service life of the asset as the basis for depreciation. The depreciation amount is generally the same in each period, unless there is an adjustment posted to the asset. The formula for Straight Line Service Life is:
Depreciation amount = Depreciation base\Total service life
where the depreciation base is typically the net book value minus the salvage value of the asset.
- Straight Line Life Remaining uses the remaining service life of the asset as the basis for depreciation. The depreciation amount changes in each period, depending on the remaining life of the asset. The formula for Straight Line Life Remaining is:
Depreciation amount= Depreciation base\Remaining service life
where the depreciation base is the same as in Straight Line Service Life.
• BillurSamdancioglu 13,016 Super User on at
Depreciation method
Hi,