Straight Line Depreciation

Posted in Finance, Accounting and Economics Terms, Total Reads: 970
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Definition: Straight Line Depreciation

Straight line depreciation is a method to depreciate a tangible asset. In straight line depreciation the asset is depreciated by an equal amount throughout the life of the asset.

Example:

Machine A costs Rs 10,000 and has a salvage value of Rs 2000 at the end of 4 years.

According to straight line depreciation, depreciation expense for asset A

Depreciation =  Price – Salvage Value

                          Useful Life in Years

Depreciation = (10,000 – 2000) /4

                  = 2000 per year

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