STRAIGHT LINE METHOD AND

WRITTERN DOWN VALUE METHOD

OF DEPRECIATION
Presented By :- Submitted To:-

ASTHA DUBEY CA Pawan Popli

LOVEKESH CHOUDHARY
VINEET DWIVEDI
RAHUL JAIN
 STRAIGHT LINE METHOD
 Most commonly used method by the business.
 It is also called fixed installment method.
 A equal amount is charged for every year or written
off every year from the asset.
 Amount of depreciation –
(Cost of an Asset – Scrap Value)/Useful life of an
Asset.
 Rate of depreciation-
(Amount of Depreciation*100)/Cost of Asset)
 EXAMPLE OF SLM
Suppose a business has bought a machine for $ 10,000. They have estimated
the machine’s useful life to be eight years, with a scrap value of $ 2,000.

Now, as per the straight-line method of depreciation:

- Cost of the asset = $ 10,000
- Scrap Value = $ 2000
The useful life of the asset = 8 years

Thus, annual depreciation cost = Cost of asset – Scrap Value/Useful Life

=(10,000 – 2,000)/8 = $ 1,000

Hence, the Company will depreciate the machine by $1000 annually for
eight years.
 MERITS & DEMERITS OF SLM
MERITS :
 Simple and easy to understand
 Equality of depreciation burden
 Assets can be completely written off
 Every year, the profit and loss account is debited by the
same amount of Depreciation.

DEMERITS :
 Ignores the actual use of the asset
 Ignores the interest factor
 Total charge on the assets will be more when the asset
becomes older