What is the formula to calculate the straight-line depreciation rate?

The formula to calculate the straight-line depreciation rate is determined by the relationship between the asset's useful life and its total value. The correct method involves taking the total percentage of the asset's value, which is considered as 100%, and dividing it by the estimated useful life of the asset. This results in the annual depreciation percentage that reflects the consistent allocation of the asset's cost over its lifespan.

Using this formula, the straight-line depreciation rate indicates how much of the asset's cost should be expensed each year. As the asset ages, this straight-line method ensures that the depreciation expense is evenly distributed, allowing for straightforward financial reporting and analysis. Thus, understanding this formula is essential for accurately representing asset depreciation in financial statements.