Advantages & Disadvantages of Straight Line Depreciation
Below are the advantages of using the Straight Line method of depreciation:
1. The straight-line depreciation method is by far the most common and simplest method of computing the depreciation expense of any fixed assets for a period.
2. This method is useful for fixed assets that are having small intrinsic value like furnitures & fittings, patents, etc.
3. It is widely acceptable and can be easily understood even by ordinary person.
4. In this method, assets can be completely written off.
5. This is the most suitable method for small organizations and firms.
Disadvantages of using the Straight Line method of depreciation:
1. This method is not suitable for assets having long life and more value.
2. It is not a suitable method for fixed assets like plant and machinery as depreciation is constant while the repairs on such assets are heavy in later years.
3. This method does not reflect the difference in usage of a fixed asset from one period to another.
1. The straight-line depreciation method is by far the most common and simplest method of computing the depreciation expense of any fixed assets for a period.
2. This method is useful for fixed assets that are having small intrinsic value like furnitures & fittings, patents, etc.
3. It is widely acceptable and can be easily understood even by ordinary person.
4. In this method, assets can be completely written off.
5. This is the most suitable method for small organizations and firms.
Disadvantages of using the Straight Line method of depreciation:
1. This method is not suitable for assets having long life and more value.
2. It is not a suitable method for fixed assets like plant and machinery as depreciation is constant while the repairs on such assets are heavy in later years.
3. This method does not reflect the difference in usage of a fixed asset from one period to another.