Straight Line Method (SLM)

Under the Straight Line Method (SLM) — also called the Fixed Instalment Method or Original Cost Method — an EQUAL amount of depreciation is charged every year throughout the asset's useful life, computed once at the start and never changed thereafter (unless the asset's estimated life or scrap value is later revised):

Annual Depreciation = (Cost of Asset − Estimated Scrap/Residual Value) ÷ Estimated Useful Life (in years)

The Rate of Depreciation (as a percentage) is simply this annual amount expressed as a percentage of the ORIGINAL cost:

Rate of Depreciation (%) = (Annual Depreciation ÷ Cost of Asset) × 100

Because the SAME amount is deducted every year from the ORIGINAL cost (never from the reducing book value), the asset's book value declines in a straight line, reaching exactly the estimated scrap value (or zero, if no scrap value is assumed) at the end of its useful life — never negative, and never short of zero either, if the estimates hold true. …