Annual Depreciation Expense Formula is a way of calculating the value of an asset via allocated losses over time. The formula takes into consideration factors such as cost, estimated useful life, and residual value in order to estimate the total cost of ownership over the full lifetime of the asset. By using this formula, companies are able to ensure that their assets are properly accounted for in their financial statements. The formula is both straightforward and flexible, allowing businesses to easily adjust assumptions when necessary.