Advantages and disadvantages of straight line method homework help

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In business there are many assets that are considered in the depreciable category after the accounting is done over them. Straight line method or also called as straight line depreciation method is one of the ways to gradually lessen the carrying amount of a fixed asset all over its useful span. Right from the purchase of the asset, this method separates each and every cost that asset has faced all over its useful life. The simplicity of operation of straight line method makes it more understanding and most used method in accountancy. Our Advantages and disadvantages of straight line method homework help article will provide a decent review over the methods including the musts and don’ts of this method.

What is depreciation?

The reduction in value of an asset with due course of time usually due to the wear and tear of it is called as depreciation.

Depreciation expense = (initial cost – salvage cost)/ No. Of years the asset is used

The above formula given in our Advantages and disadvantages of straight line method homework help article is to calculate the depreciation expense of each interval of an assets use. This formula is used in straight line depreciation method.

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Steps for straight line depreciation method

The following steps compiled by our Advantages and disadvantages of straight line method homework help team experts will enlighten the readers about the processing of this method.

I. Find out the initial cost of the fixed asset
II. Reduce the appropriate salvage value of the asset from the initial cost straight from the record books
III. Find out the appropriate useful life span of the asset. A standard useful life can be effectively considered for each asset.
IV. Divide the years of usage of the asset with the subtracted value to get the depreciation rate
V. Multiply the achieved depreciation rate with the asset cost.

Our Advantages and disadvantages of straight line method homework help team experts have worked in the market for years and hence are familiar with the practical application of straight line method.

Advantages of straight line method

1. The simplicity of this method makes it easy to understand and apply
2. Full depreciable cost of the asset in case of asset depreciation up to zero value or net scrap value can be facilitated.
3. Same amount of depreciation charged in profit and loss account every year makes it easy to compare the profits for different years.
4. This method is useful for the assets whose usage is consistent every year and whose useful span can be accurately guessed.
5. This method can be easily applied to long term assets

Disadvantages of straight line method

1. When the comparison for two years is done for the usage of asset, this method does not reflect accurately the difference of usage in the asset.
2. Matching of cost and revenue is not necessary when this method is used for long term assets
3. Rapidly developing technologies in software accounting field restricts the usage of straight line depreciation method for certain depreciable assets.

In our Advantages and disadvantages of straight line method homework help online services we also provide solutions to many numerical based on our reader’s perspective.

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