Question

In which of the following methods, is the cost of the asset written off in equal proportion during its economic life?

• A. Straight line method
• B. Written down value method
• C. Units-of-production method
• D. Sum-of-the years'-digit method

Answer 1

Answer: (A)

Straight line method

This is the easiest and one of the widely used methods of providing depreciation. This method is based on the assumption of equal usage of the asset over its entire useful life.

It is called straight line for a reason that if the amount of depreciation and the corresponding time period is plotted on a graph, it will result in a straight line.