The straight Line Depreciation Method is one of the most popular and easy methods of charging depreciation on fixed assets. Under this method, depreciation is charged on the original cost of the asset every year, at a fixed rate of percentage. Therefore, in this case, the amount of depreciation remains the same for each of the years. This method of depreciation is also known as the Original Cost Method or Equal /Fixed Instalment Method. Advantages of Straight Line Method of Depreciation are discussed below
Advantages of Straight Line Method
The given below are the various advantages of the Straight Line Method of depreciation.
- It is a simple and easy method of calculating depreciation.
- Under this method, assets can be completely written-off. That is, an asset can be depreciated to its net scrap value or zero value.
- As under this method, the same or equal amount of depreciation is charged from the Profit and Loss Account each year, so, the burden of depreciation on the net profit remains the same.
- It is suitable for those assets that have low repairs and maintenance costs and are used continuously in the business over a period of time.
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