straight-line depreciation


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Straight-line depreciation

Amortizing or apportioning an equal dollar amount of depreciation in each accounting period.

Straight-Line Depreciation

A system of depreciation in which one deducts the same amount every year. For example, suppose an asset costs $1,200 with a usable life of three years and a salvage value of $300. If one uses straight-line depreciation, one deducts $300 each year.

straight-line depreciation

A method of recording depreciation such that the original cost minus the estimated salvage value of an asset is written off in equal amounts during each period of the asset's life. For example, a machine costing $10,000 with an estimated life of five years and no salvage value would be depreciated $2,000 ( $10,000/5 ) annually, using straight-line depreciation. If the machine had an estimated salvage value of $4,000, annual straight-line depreciation would amount to $1,200. Compare accelerated depreciation.

straight-line depreciation

A method of accounting for the gradual loss in value of an asset over time by predicting that the asset's value will decline in equal amounts each year over a specified number of years.The method is also used for tax purposes as an expense allowed each year for the supposed loss in value of an asset,even though it might actually be increasing in value.See depreciation.

Straight-Line Depreciation

A method of computing depreciation under which the depreciation deduction is the same for each full year.
References in periodicals archive ?
Taxpayer in 35% Bracket Tax at marginal ordinary income rates ($15,000 x 35%) $5,250 Tax at LTCG rates ($15,000 x 15%) 2,250 Loss of tax savings due to lookback rule $3,000 Exhibit 4 Exhibit Depreciation Recapture A business acquired a warehouse in 1988 for $780,000, depreciated it using straight-line depreciation and sold the asset for $860,000, when accumulated depreciation totaled $290,000.
Inland Revenue (2007, page 43) indicates that telecommunications equipment with a 10 year economic life would be eligible for straight-line depreciation at the rate of 15% per year, and this depreciation process would then be completed in almost seven years.
The straight-line depreciation election can be a trap for the unwary if not made in the year of acquisition.
This method is implemented until the first year in which the straight-line depreciation of the not-yet-depreciated cost exceeds the depreciation under the declining balance method.
Since this estimation error is simply an artifact of the computational mathematics of straight-line depreciation compared to the mathematics of nonlinear depreciation implicit in the present value calculation, it can be specified as purely a function of time independent of the characteristics of the property being appraised.
For example, with straight-line depreciation, depreciation in the first year is equal to depreciation in the second year, which is equal to depreciation in the third year, and so on.
Equation (9) makes it clear that the two paths are linked, and it is well known that the one-hoss-shay pattern of efficiency implies straight-line depreciation with a zero rate of discount, and a concave pattern with a positive discount rate.
To generate these data, we used a straight-line depreciation of 7 years and the rule of thumb of 10% of the initial capital costs as the expense for an annual maintenance contract.
Straight-line depreciation is used with a $100,000 reduction for nondepreciable costs and a 27.
Because the historical cost accounting convention used for real estate assets utilizes straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time.
If we assume, for simplicity, that the useful life is 40 years and straight-line depreciation was being used, the owner would take a $10,000 tax deduction each year against his income.
1250 gain, equal to the amount of the straight-line depreciation allowed for the property, limited by the amount of net Sec.