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Straight line Depreciation

Straight line Depreciation. Ms. Naira. Straight line depreciation is based on the assumption that the assets usefulness declines evenly over time. Increased activity or use of the asset has no bearing on the amount of depreciation each year since it is the same every period.

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Straight line Depreciation

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  1. Straight line Depreciation Ms. Naira

  2. Straight line depreciation is based on the assumption that the assets usefulness declines evenly over time. Increased activity or use of the asset has no bearing on the amount of depreciation each year since it is the same every period. • Straight line depreciation is the simplest and most frequently used depreciation method for financial reporting purposes. About Straight Line Depreciation

  3. (Original cost – Estimated salvage value) Estimated Useful Life • If Sunny places a vehicle he purchased for $12,800 in service as of the beginning of 2010 with an estimated life of five years, and a $1,000 salvage value, Sunny would calculate straight line depreciation as $2,360 per year: (12,800 – 1,000) = $2360 5 Calculate Depreciation: Straight Line Method Always equal to salvage value

  4. Graphically, straight line depreciation is a straight line spread over the course of 5 years, with a $2,360 depreciation expense taken each year on the income statement. When viewed graphically, it is easy to see where the straight line depreciation method gets its name. The depreciation expense holds steady during the time period Depreciation Expense Resembles a Flat line

  5. the book value of the asset declines steadily over the course of the asset depreciation period, since an even amount of depreciation is taken each period. Notice that the depreciation is taken from the total acquisition cost of $12,800, not the depreciation base of $11,800. Straight line Method Book Value

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