Uniform Charge Methods
In case of these methods depreciation is charged on uniform basis year after year. Such methods are considered appropriate only for such assets which are uniformly productive. Following three methods fall in this category.
Fixed instalment method. This is also termed as Straight Line Method (SLM).
According to this method, depreciation is charged evenly every year throughout the effective life of the asset The amount of depreciation is calculated as follows.
Depreciation = Original Cost of the Fixed Asset — Estimated Scrap Value/ Life of tie Asset in Number of Accounting Periods
Depreciation to be charged each year can also be expresscd as a percentage of cost.
Merits. (I) The method is simple to understand and easy to apply.
(ii) The value of the asset can be reduced to zero (or its scrap value) under this method. [Read more…]