To compute straight line depreciation use the following formula:
(Asset cost minus salvage value)/ Useful life
Because salvage value is recouped, the straight line method does not depreciate below the salvage value
Example
Uncle Joe bought an equipment for $24,000. Uncle Joe estimates the useful life four years with a salvage value of $4,000.
Using our straight line formula, depreciation expense is computed as follows:
(24,000 minus 4,000) /4 = 5,000 depreciation