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Yearly Depreciation = Original Purchase Value of the Asset X Depreciation %
The same amount is Depreciated over the Life time of the Asset under Straight Line Method.
straight line method = cost - resodual value
use ful life of assets
depreciation p.a = 320,000 -20000
5 years
= 60,000 pa
A method of calculating the depreciation of an asset which assumes the asset will lose an equal amount of value each year. The annual depreciation is calculated by subtracting the salvage value of the asset from the purchase price, and then dividing this number by the estimated useful life of the asset.
SLM= Cost - Residual Value(Salvage value) / No of years (Life of an asset)
Straight line method charges equal amounts to the p&l over the economical lifeof an asset. Therefore the amont to be charged to the p&l can be computed by this formular:
Anual dpn charge = (Total cost of the asset - Residual value) ÷ Useful economic life
Anual dpn charge=
