Book Value Using Straight Line Method

According to straight line depreciation your macbook will depreciate 300 every year.

Book value using straight line method. In year one you multiply the cost or beginning book value by 50. Made by victoria flys for cee300. Straight line depreciation is a method by which business owners can stretch the value of an asset over the extent of time that it s likely to remain useful.

The most common method for computing depreciation for financial reporting purposes is the straight line method. The straight line method of calculating straight line depreciation has the following steps. The company has the policy to depreciate all assets annually using the straight line method of depreciation.

The ddb method does not subtract the salvage amount from book value. The straight line method results in the same amount of depreciation expense for each year. 2 decide which depreciation method to use.

To compute for book value four essential parameters are needed and these parameters are present amount or worth p salvage value s total estimated life of the asset n and number of years of the asset t. Let s assume that the company jack ltd purchased plant and machinery on january 1 2011 worth 800 000 having a useful life of 10 years. It s the simplest and most commonly used depreciation method when calculating this type of expense on an income statement and it s the easiest to learn.

Now all assets are purchased because they represent future benefits. You then find the year one depreciation by multiplying the 270 000 book value by 50 to get 135 000. The straight line calculation steps are.

Annual depreciation 2000 500 5 years 1 500 5 years 300. The annual depreciation would be calculated from the difference between it s cost and salvage value which would be 12 000 2 000 or 10 000. Determine the useful life of the asset.