What are the advantages of using straight line depreciation?

Merits and Limitations of Straight line method/ Fixed instalment method / Original cost method

  • (a) Simple and easy to understand.
  • (b) Equality of depreciation burden.
  • (c) Assets can be completely written off.
  • (d) Suitable for the assets having fixed working life.
  • (a) Ignores the actual use of the asset.

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What are the advantages and limitations of straight line and diminishing balance method?What are the advantages and limitations of straight line and diminishing balance methods?

  • It is simple to understand and apply.
  • Asset value can be made zero value at the end of useful life.
  • The asset value can be completely written off using this method.

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What are the advantages of using straight line depreciation?

Advantages

  • Simplicity. The straight-line method is the simplest method for calculating depreciation.
  • Assets can be Written Off Completely.
  • Total Depreciation Charge is Known.
  • Suitable for Small Businesses.
  • Useful for Assets of Lesser Value.
  • Pressure on Final Years.
  • Does not have the Provision of Replacement.
  • Interest Loss.

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What are the advantages and disadvantages of straight line method?

Merits and Limitations of Straight line method/ Fixed instalment method / Original cost method

  • (a) Simple and easy to understand.
  • (b) Equality of depreciation burden.
  • (c) Assets can be completely written off.
  • (d) Suitable for the assets having fixed working life.
  • (a) Ignores the actual use of the asset.

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What is straight line method?

Definition of straight-line method
: a method of calculating periodic depreciation that involves subtraction of the scrap value from the cost of a depreciable asset and division of the resultant figure by the anticipated number of periods of useful life of the asset — compare compound-interest method.

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Which of the following are the advantages of straight line method?

The straight Line method has the following advantages:

  • It is very simple, easy to understand, and apply.
  • Asset can be depreciated up to the net scrap value or zero value.
  • Every year, the same amount is charged as depreciation in the profit and loss accounts.

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What are the advantages of straight line method of depreciation?

It is simple to understand and apply. The asset value can be completely written off using this method. Asset value can be made zero value at the end of useful life. It is easier to compare profits as an equal amount of depreciation is charged every year.

What is the disadvantage of straight line method?

Following are the limitations of the Straight Line method: It ignores the actual use of the asset. 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.

What are the advantages and disadvantages of diminishing balance method?

Diminishing Balance Method (Reducing Balance Method)

ADVANTAGES DISADVANTAGES
– Every year, there is an equal burden for using the asset. This is because depreciation goes on decreasing every year whereas cost of repairs ncreases. – The value of the asset cannot be brought down to zero.

What is straight line method explain any three advantages of straight line method?

The following are the advantages of the Straight Line method: It is simple to understand and apply. Asset value can be made zero value at the end of useful life. The asset value can be completely written off using this method.

What are the disadvantages of straight line depreciation?

Straight-line depreciation does not account for the loss of efficiency or the increase in repair expenses over the years and is, therefore, not as suitable for costly assets such as plant and equipment. The functional life span of some assets cannot clearly be estimated.

What is straight line formula?

The general equation of a straight line is y = m x + c , where is the gradient and the coordinates of the y-intercept. Look at the National 4 straight line section before continuing. We can find the equation of a straight line when given the gradient and a point on the line by using the formula : y − b = m ( x − a )

What is straight line example?

A straight line can be formed between two points also but both the ends extend to infinity. A straight line is a figure formed when two points A (x1, y1) and B (x2, y2) are connected with the shortest distance between them, and the line ends are extended to infinity.

What are the features of straight line method?

Straight Line Method:
(1) Depreciation rate and amount remain the same in each year of asset's life. (2) Depreciation rate (%) is always applied on original cost of asset. (3) Straight line depreciation method is relatively easy and simple to use.

What are the advantages of diminishing balance method?

Diminishing Balance Method (Reducing Balance Method)

ADVANTAGES DISADVANTAGES
– Every year, there is an equal burden for using the asset. This is because depreciation goes on decreasing every year whereas cost of repairs ncreases. – The value of the asset cannot be brought down to zero.

Which of the following is advantage of diminishing balance method?

Advantages of the Diminishing Balance method: This method is considered relevant for income tax purposes. Under this method of depreciation, higher depreciation is calculated in the initial years with matching revenue generated during the initial years.

What are the disadvantages of depreciation?

The disadvantage of a depreciation as an accounting concept is that it is an estimation of cost, not a precise measure, and introduces some element of subjectivity that can be used to increase or decrease net income by companies.

What is the example of line?

The definition of a line is a mark connecting two points, something stretched between two things, or two or more people standing in a row. An example of a line is a horizontal mark drawn on a piece of paper. An example of a line is caution tape marking off the scene of an accident. An example of a line is fishing wire.

Which are straight lines?

A straight line is an endless one-dimensional figure that has no width. A straight line does not have any curve in it. It can be horizontal, vertical, or slanted. If we draw an angle between any two points on the straight line, we will always get a 180-degree.

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