Straight line depreciation

Straight line depreciation,

Definition of Straight line depreciation:

  1. Method of computing depreciation in which the depreciable cost (historical or purchase price) of a tangible capital asset is reduced by an equal amount in each accounting period (usually a year) over the assets estimated useful life. Straight line depreciation is computed as a fixed expense by dividing the assets depreciable cost by the number of years the asset is estimated to remain in service. Suitable where the usage of an asset remains generally uniform despite the assets age, it is the simplest and most common method of computing depreciation. For easy computation, the depreciation rate may be converted to a percentage of the depreciable cost. See also declining balance depreciation.

How to use Straight line depreciation in a sentence?

  1. The straight line depreciation resulted in a different number than our previous method of depreciation calculation so we changed our process.
  2. Company XYZ utilizes straight line depreciation for assets in its manufacturing facility in computing Net Operating Income for its financial accounting but uses accelerated depreciation for tax purposes.
  3. You should always factor in the straight line depreciation and do your best to get something for your old machinery.

Meaning of Straight line depreciation & Straight line depreciation Definition