BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Straight line method is a method of calculating depreciation in which the cost of the asset is spread uniformly over the life years by writing off a fixed amount every year. The amount of depreciation will remain constant every year when straight line method is followed.

Detailed explanation-2: -To calculate depreciation using a straight line basis, simply divide net price (purchase price less the salvage price) by the number of useful years of life the asset has.

Detailed explanation-3: -Under straight line method of depreciation, the amount of depreciation remains constant because depreciation is provided at a fixed rate on the purchase price of the asset. Was this answer helpful?

Detailed explanation-4: -Straight Line Method (SLM) The amount of annual depreciation is computed on the Original Cost, and it remains fixed from year to year. This method is also known as the ‘Original Cost method’ or ‘Fixed Instalment method’.

Detailed explanation-5: -The straight line method has the following limitations: It does not consider the loss of interest received for the amount invested in the asset. It does not take into consideration that the depreciation on the asset will be more as it becomes old. It ignores the actual use of the asset.