Question

Under straight line method, depreciation is calculated on:

• A. Written Down Value
• B. Salvage Value
• C. Original Cost
• D. Market Value

Answer 1

Answer: (C)

Original Cost

Depreciation is calculated on Original Cost in case of straight line method.In straight line depreciation method, depreciation is charged uniformly over the life of an asset. We first subtract residual value of the asset from its cost to obtain the depreciable amount. The depreciable amount is then divided by useful life of the asset in number of accounting years to obtain depreciation expense per accounting year.