Straight Line and Reducing Balance Methods of Depreciation

Financial Accounting SSS1 Third Term

WEEK 7

Straight Line and Reducing Balance Methods of Depreciation

Performance Objectives

1. Straight Line method

Content

This method makes provision for an equal amount to be charged as depreciation for each year of useful life.  It is calculated by thus; cost of asset less residual value divided by the number estimated as the useful life span. It is said to be the easiest to calculate and consists of depreciating the value of an asset in equal instalments over the cost of its useful life. In order to calculate straight-line depreciation, you’ll need the following information:

• The asset’s initial cost
• The salvage value (It’s estimated value at the end of its useful life)
• The useful lifespan,…