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In businesses, many assets are considered depreciating after the accounting is done. One of the ways of calculating depreciation is the Straight Line Method. This is the most commonly employed and uncomplicated depreciation methodology.

Its simplicity makes it the most used and most understanding method of calculating depreciation in accounting. Students pursuing Accounting can easily avail of Straight Line Method Depreciation assignment help from BookMyEssay.

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What is a Straight Line Method Depreciation?

Straight Line Method Depreciation is a method to calculate amortization and depreciation. It is the simplest way to find out the loss of value of assets over time. It is calculated by dividing the difference between the cost of an asset and the expected salvage value by the number of years it will be used.

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For calculating the straight-line method, take the cost price of an asset, subtract its salvage value, you will get the estimated value when it will no longer be needed. Divide this resulting figure by the number of years this asset shall remain useful.

Straight Line Method = (Cost price of an asset-Salvage Value)/Estimate life of an asset.

What are the Advantages of Straight Line Method Depreciation?

Some of the advantages are discussed in our Straight Line Method Depreciation assignment help in Australia:

  1. It is easy and simple to understand: Computation of depreciation under the straight-line method is easy and simple to understand.
  2. Equal depreciation burden: Under this method, an equal depreciation amount is debited to the P/L account every year. Therefore, the depreciation burden on the profit of every year is equal.
  3. The assets are written off: The book value of assets can be zero when there is no value or to its scrap value towards the end of their useful life. The asset account will be written off completely.
  4. It is suitable for assets that have fixed working life: This depreciation method is useful for fixed assets that have fixed years of working life. Estimating the useful life in these cases is easy and can easily determine the rate of depreciation.

The straight-line deprecation method can be used easily, gives few errors over the asset's life, and expense the same amount in each accounting period. The other methodologies of calculating depreciation are complex but a straight-line method uses three variables for calculating the depreciation amount for each accounting period.

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The Assumptions of a Straight Line Depreciation Method

Though the cost price of assets is known, you need to make assumptions about the salvage value of assets and their useful life. The numbers can be reached in different ways, however, getting them wrong might prove to be costly. A straight-line method assumes that the value of an asset depreciates at an unchanging and steady rate. It might not be true in all cases, where a different depreciation method will be used.

It is one of the most straightforward methods to calculate depreciation. This is useful when the value of an asset reduces steadily with time. This is highlighted in our Straight Line Method Depreciation homework help service.

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