Syntax. SLN(Cost,Salvage,Life)
Definition. This function calculates the depreciation amounts of capital assets by using the linear depreciation method.
Arguments
Cost (required) The purchase cost (net
purchase price plus incidental purchase expenses minus reduction of purchase cost) of an asset. If
you do not use a number, the error #VALUE! is displayed. If the entered number is
negative, the calculated values cannot be interpreted.
Salvage (required) The value of the
asset at the end of the depreciation duration. If you don’t use a number, the error
#VALUE! is displayed. If the entered number is negative, the error
#NUMBER! is displayed.
Life (required) The number of periods in which the asset is depreciated. You should use an integer greater than zero for this argument.
Background. Depreciation is used to determine the loss of value of an asset and make that loss visible. It should not be confused with depreciation because of abrasion/use, which refers to the cost of purchasing an asset as part of operation expenses from a tax point of view.
The depreciation amount, which is the same in each period, is determined from the difference between purchase cost and remainder, divided over the number of periods. This amount reduces the book value in each period.
The linear depreciation method is permitted within some tax laws. However, sometimes a fractional part of the year in the first period must receive special consideration, the function SLN() usually cannot be used. You need to manually adjust the amount of the first depreciation period and write the rest with the help of SLN().
Example. An asset with a purchase cost of $1,000.00 should be depreciated in five years to a residual value of $100.00 by using the linear method. You can calculate the depreciation amount in each period by using SLN() and subtract it from the book value of the previous period.
Alternatively, you can create a depreciation plan that implements the formulas for calculating the first depreciation amount as well as the processes for calculating the other amounts.