Math for Business Operations

Applied Accounting with Excel

UNIT08 - Lesson 3

Straight-Line Depreciation

45 minutes
Lesson Overview

Lesson Focus

Calculate straight-line depreciation by hand and build a full depreciation schedule

Key Unit Objectives

Enduring Understandings:

  • Long-term assets are tracked differently from everyday expenses because they provide value over multiple periods
  • Depreciation method choice affects reported profits, tax obligations, and asset book values over time
  • Professional asset tracking requires organized registers with cost, useful life, salvage value, and method documentation
  • The depreciation decision has real consequences for financial statement presentation and business decision-making

Lesson Activities

Activity 1: Straight-Line Formula Introduction
10 minutes

Learn the straight-line depreciation formula and its logic

Details:

  • Formula: Annual Depreciation = (Cost − Salvage Value) ÷ Useful Life
  • Logic: Equal expense each year — simple, predictable, widely used
  • Example: $10,000 equipment, $2,000 salvage, 4-year life = $2,000/year
  • Practice: Calculate straight-line depreciation for 3 sample assets
Straight-Line Depreciation

The simplest and most commonly used depreciation method

  • Same expense amount every year of the asset's useful life
  • Easy to calculate and explain to non-accountants
  • Appropriate when asset usage is consistent over time
  • Book value decreases in a straight, predictable line
Activity 2: Depreciation Schedule Build
20 minutes

Build a complete straight-line depreciation schedule by hand

Details:

  • Columns: Year, Beginning Book Value, Depreciation Expense, Accumulated Depreciation, Ending Book Value
  • Fill in schedule year by year for sample asset
  • Verify: Final book value equals salvage value
  • Verify: Total accumulated depreciation equals depreciable base
Activity 3: Statement Impact Connection
10 minutes

Connect depreciation to income statement and balance sheet

Details:

  • Income statement: Depreciation expense reduces net income each year
  • Balance sheet: Accumulated depreciation reduces asset book value
  • Cash flow: Depreciation is a non-cash expense (added back in operating activities)
  • Diagram: Show how one depreciation entry flows through both statements
Activity 4: Milestone Check
5 minutes

Verify straight-line schedule completion

Details:

  • Check: All calculations correct?
  • Check: Final book value = salvage value?
  • Check: Can students explain the statement impact?
  • Preview Day 4: Double-declining balance — an accelerated method
Required Materials
  • Straight-line formula card
  • Depreciation schedule template
  • Statement impact diagram
  • Sample asset data for practice
Differentiation Strategies

For Struggling Students

  • • Scaffolded asset register with pre-filled asset descriptions
  • • Formula templates for depreciation calculations
  • • Step-by-step build guide with screenshots
  • • Peer mentoring partnerships with advanced students
  • • Reduced asset count while maintaining authentic business context

For Advanced Students

  • • Extension challenge: Add partial-year depreciation logic
  • • Compare three or more depreciation methods
  • • Leadership roles: Mentor teammates and facilitate peer critique
  • • Deep dive: Tax vs. book depreciation differences
  • • Research MACRS depreciation and its real-world application

For English Language Learners

  • • Depreciation terminology glossary with visual aids
  • • Key formulas explained in plain language with examples
  • • Recommendation templates with language scaffolding
  • • Visual depreciation schedule examples
  • • Partner with fluent English speakers for presentation preparation