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Which Depreciation Method to Use?

Alexander Ross • • 6 min read
Which Depreciation Method to Use?

Straight-Line Method: This is the most commonly used method for calculating depreciation. In order to calculate the value, the difference between the asset's cost and the expected salvage value

salvage value
The residual value, also known as salvage value, is the estimated value of a fixed asset at the end of its lease term or useful life. In lease situations, the lessor uses the residual value as one of its primary methods for determining how much the lessee pays in periodic lease payments.
› terms › residual-value
is divided by the total number of years a company expects to use it.

What is the proper depreciation method for most property?

The Modified Accelerated Cost Recovery System (MACRS) is the proper depreciation method for most property. A taxpayer must use Form 4562, Depreciation and Amortization, to report depreciation on a tax return.

Can I use straight line depreciation for tax purposes?

The Internal Revenue Service allows businesses to depreciate assets using the straight-line method over the modified accelerated cost recovery system recovery period or the straight line over the alternative depreciation system recovery period.

Alexander Ross
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Alexander Ross

Alexander Ross has covered the video game industry for a decade, writing deep dives on game design, esports tournaments, VR developments, and gaming culture.