Straight-Line Method

Depreciation is the same for each year of the assets useful life.

It is measured solely by the passage of time.

Advantage: Fixed asset is shown at current or realisable value.

Straight-Line Formula

Depreciation for any period = (Initial cost of asset-Salvage value) / Useful Years

Solved Examples

Initial cost of asset = $30,000

Salvage value = $500

Years of Useful Life = 5 years

= (30,000 - 500 ) / 5

= $ 5,900