STRAIGHT LINE DEPRECIATION CALCULATOR

Kindly enter the purchase price, useful years and the scrap value of the asset when it will be disposed of. Please note that purchase price and useful years cannot be zero.







Frequently Asked Questions on straight line depreciation

What is straight line depreciation?

Straight line depreciation is a method of depreciation where an asset is depreciated uniformly across its useful years.

It is a method of depreciation that uses a fixed percentage of the depreciable value of an asset as the depreciation charge for each year of the asset's useful life.

How do you calculate straight-line depreciation?

Straight line depreciation is calculated as a depreciable value divided by the useful life of an asset.

Given that the depreciable value of an asset is the difference between the cost of the asset and its scrap value, it follows that straight line depreciation can be calculated as follows:

$$\text{Depreciation}=\frac{\text{cost}-\text{scrap value}}{\text{useful life}}$$

Can an asset's value be completely written off in straight-line depreciation?

Yes, the asset's value can be completely written off to zero in a straight line.

The rationale for this is that straight-line depreciation evenly distributes an asset's cost over its useful life.

What are the advantages of straight depreciation?

The advantages of straight-line depreciation are:

1. It is very easy to calculate

2. It is highly suitable when an asset's useful life can be determined

3. It enables a full depreciation of an asset. That is, it allows an asset to be completely written off.

What are the disadvantages of straight-line depreciation?

The disadvantages of straight-line depreciation are:

1. Because the depreciation is fixed every year, it does not correspond to the services generating capacity of the asset.

2. It is difficult to estimate the scrap value or the useful years of an asset.

3. It might not be appropriate for long-lasting assets whose useful years are hard to predict.

READ ALSO: MEANING, EXAMPLE, ADVANTAGES AND DISADVANTAGES OF STRAIGHT-LINE DEPRECIATION

What distinguishes declining balance depreciation from straight-line depreciation?

Straight line depreciation charges a fixed percentage on the asset's depreciable value, whereas declining balance depreciation charges a fixed percentage of the asset's book value. This is the main difference between the two methods of depreciation.

More differences between straight-line depreciation and declining balance depreciation can be found here

What is the difference between straight-line depreciation and double declining balance depreciation 

Straight line depreciation and double declining balance depreciation are fundamentally different from one another because straight line depreciation applies a fixed percentage to the asset's depreciable value, whereas double declining balance applies twice the rate of straight-line depreciation to the asset's book value.

What is the difference between straight-line depreciation and the sum of the year's digits' depreciation?

The major difference between straight-line depreciation and sum-of-the years digits depreciation is that while sum-of-the-years digits depreciation is an accelerated method of depreciation, straight-line depreciation is a constant charge method of depreciation.

What does salvage value mean?

Salvage value is the anticipated price at which a business expects to sell an asset after it has served its purpose.

It is the anticipated value of an asset at the end of its useful life.

Salvage value is also known as scrap value or residual value.

What is the useful life of an asset? 

In accounting, the useful life of an asset can be defined as the estimated number of years that an asset is expected to continue providing service to the company.

To put it another way, useful life is the number of years over which an asset will be usable.

The book value of an asset will be equal to its scrap value, or zero, at the end of its useful life under straight-line depreciation

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