What is the straight-line depreciation formula?

The straight-line depreciation formula expresses how an asset's value decreases over time at a constant rate. In this context, 'S' represents the salvage value (the value of the asset at the end of its useful life), 'Vo' represents the initial value or cost of the asset, 'D' represents the depreciation expense per time period, and 'n' denotes the number of time periods.

The formula S = Vo - Dn accurately reflects that the salvage value of the asset at any given time is equal to the initial value minus the total depreciation accumulated over 'n' periods. Here, the 'Dn' term represents the total depreciation that is deducted from the initial value. Therefore, as time goes on and the asset depreciates, its salvage value decreases accordingly.

Using this formula, you can effectively calculate how much of the asset's value has been lost over time, giving a clear picture of its financial standing throughout its useful life. The other options do not appropriately represent the relationship between the initial value, depreciation, and the final salvage value of the asset, making them unsuitable for depicting straight-line depreciation.