Straight Line Basis


DEFINITION of 'Straight Line Basis'

A method of computing amortization (depreciation) by dividing the difference between an asset's cost and its expected salvage value by the number of years it is expected to be used.

BREAKING DOWN 'Straight Line Basis'

Also known as straight line depreciation or straight line amortization, this is the simplest deprecation method. Basically, it just spreads out the cost of an asset equally over its lifetime.

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  1. What is the process for a building owner depreciating leasehold improvements in a ...

    As long as the building owner is the person or entity that provides leasehold improvements, then the owner can depreciate ... Read Full Answer >>
  2. Are capital assets normally immediately expensed or are they amortized/depreciated ...

    Capital assets are normally amortized or depreciated over the life of the asset since, by definition, capital assets are ... Read Full Answer >>
  3. How does proration affect asset depreciation?

    Accountants calculate an asset's pro-rata depreciation during the first and final year of its service. The IRS established ... Read Full Answer >>
  4. What are the disadvantages of using the sinking fund method to depreciate an asset?

    Using the sinking fund depreciation definitely impinges on a company's cash flow and profitability during the depreciation ... Read Full Answer >>
  5. How do I create a trading strategy when a stock doesn’t reach a higher high swing?

    Contra accounts reduce book value in that a contra account is an accounting tool used to offset the balance of another related ... Read Full Answer >>
  6. What is the difference between carrying value and fair value?

    Carrying value and fair value are two different accounting measures used to determine the value of a company's assets and ... Read Full Answer >>
  7. Are noncurrent assets depreciated?

    Depreciation is an accounting method that allocates a tangible asset's cost over its life. Companies usually depreciate noncurrent, ... Read Full Answer >>
  8. What are the advantages of using an effective interest rate figure?

    The primary advantage of using the effective interest rate figure is simply that it is a more accurate figure of actual interest ... Read Full Answer >>
  9. How is salvage value used in depreciation calculations?

    When calculating depreciation, an asset's salvage value is subtracted from its initial cost to determine total depreciation ... Read Full Answer >>
  10. What are the different ways to calculate depreciation for tangible assets?

    Depreciation is a method used to allocate the cost of a company's tangible assets over the assets' useful life. In other ... Read Full Answer >>
  11. How do I calculate fixed asset depreciation using Excel?

    Depreciation is a method that allocates the cost of a company's fixed assets over the assets' useful life. In other words, ... Read Full Answer >>
  12. Is depreciation only used for tangible assets?

    Depreciating an asset involves claiming the expense on the business's taxes over the course of the life of the asset in an ... Read Full Answer >>

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