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Straight line method is a way that use to reduce asset( such as home, car, computer) value in accounting system to balance profit in accounting aspect. For example if you buy a room for using in business, it did not fair to count that expend into the year that you bought it. If you do so it will show you lose a lot in business. So, to prevent that you can use several way to reduce that room cost year by year. It call depreciation in accounting method. Straight line method is one of the way to depreciate the asset. For example if the room is cost 1000$ and you will use the room for 10 year, after using 10 year you can sell with 100$. Then you have to
(1000-100)/10. 100$ scrap value (ie. the value that you will get when you sell after using.
So the answer is 90$, so you have to count 90$ per year as an expenses.
Hope you will OK with this answer.
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∙ 15y ago
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