Скачать или смотреть Depreciation – Straight Line Method (SLM) | Class 11 Accountancy (Fast Revision)

Depreciation is the gradual decrease in the value of a fixed asset due to use, passage of time, wear and tear, or obsolescence.

Straight Line Method (SLM):

Under the Straight Line Method, an equal amount of depreciation is charged every year over the useful life of the asset.

Formula:

Annual Depreciation=Cost of Asset−Scrap ValueUseful Life of Asset\text{Annual Depreciation} = \frac{\text{Cost of Asset} - \text{Scrap Value}}{\text{Useful Life of Asset}}Annual Depreciation=Useful Life of AssetCost of Asset−Scrap Value​

Features of SLM:

Depreciation amount remains constant every year

Easy to calculate and understand

Suitable for assets whose usefulness remains uniform (e.g., buildings, furniture)

Journal Entry:

Depreciation A/c Dr.
To Asset A/c

Advantages:

Simple and systematic method

Useful for long-term assets

Helps in easy comparison of profits

Disadvantages:

Not suitable for assets with heavy usage in early years

Does not consider repair cost increase over time

Important Exam Point:

👉 Book value of the asset reduces evenly every year under SLM.