Question

Answer in one Sentence only

What is meant by Straight Line Method of providing depreciation?

Answer 1

The Straight Line Method (SLM) is also known as the Original Cost Method because under this method, depreciation is charged at a fixed percentage on the original cost of the asset. Thus, the amount of depreciation remains same every year. The formula for calculating depreciation using this method is:
$\mathrm{Depreciation}=\frac{\mathrm{Cost}\mathrm{of}\mathrm{the}\mathrm{asset}-\mathrm{Scrap}\mathrm{value}}{\mathrm{No}.\mathrm{of}\mathrm{years}\mathrm{of}\mathrm{useful}\mathrm{life}}$