Straight Line Depreciation Method
The simplest and most commonly used, straight line depreciation is calculated by taking the purchase or acquisition price of an asset subtracted by the salvage value divided by the total productive years the asset can be reasonably expected to benefit the company [called "useful life" in accounting jargon]. purchase price of asset - approximate salvage value
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estimated useful life of asset Example: You buy a new computer for your business costing approximately $5,000. You expect a salvage value of $200 selling parts when you dispose of it. Accounting rules allow a maximum useful life of five years for computers; in the past, your business has upgraded its hardware every three years, so you think this is a more realistic estimate of useful life, since you are apt to dispose of the computer at that time. Using that information, you would plug it into the formula: $5,000 purchase price - $200 approximate salvage value
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3 years estimated useful life The answer, $1,600, is the depreciation charges your business would take annually if you were using the straight line method.
Straight line method is used for simplicity. It does not accurately define depreciation on all assets, which is the requirement of being an accounting method. Certain assets benefit by using reduced balance. Some assets loose more in the first years and using straight line would reflect an untrue value short term, however longer term methods balance out.
Straight line depreciation method is that method in which fixed amount of depreciation is charged to all fiscal years in which that asset is used.
Accelerated depreciation is method in which double rate for depreciation is used as compare to straight line method.
The formula for a straight line depreciation method is the Cost minus the Salvage Value over the Life in Number of Periods which will equal Depreciation.
the straight line method
Straight line
Straight line depreciation method is that method in which fixed amount of depreciation is charged to all fiscal years in which that asset is used.
Straight line depreciation method is that method in which fixed amount of depreciation is charged to all fiscal years in which that asset is used.
straight line method
Accelerated depreciation is method in which double rate for depreciation is used as compare to straight line method.
The formula for a straight line depreciation method is the Cost minus the Salvage Value over the Life in Number of Periods which will equal Depreciation.
the straight line method
Straight line
Straight line
Under straight line depreciation, fixed amount of depreciation is charged to every year while in declining balance method depreciation percentage remains same but depreciation is charged on remaining balance of asset due to which the amount of depreciation is different in every year.
the straight line method and the writtne down method
every person can calculate depreciation easily
every person can calculate depreciation easily