... using the asset. The reason why depreciation is used is to spread the initial price of the asset over its useful life. There are several methods that can be used when calculating depreciation. The calculations are normally based on either the amount of time passed or the amount of use of the asset. The first method is: Straight-line depreciation - this is the most simple and frequently used method in businesses. This is calculated by taking the purchase price of an asset and subtracting it from an estimated scrap value. The result is then divided by the business' estimate of the number of productive years the asset can be expected to benefit the company. The answer will give you the Net Book Value, which shows the annual depreciation amount (how much it will be worth every year. METHOD Straight line depreciation = Purchase price of asset - scrap value Estimated useful life of ...

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