Straight-Line Depreciation


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Straight-Line Depreciation

A method employed to calculate the decline in the value of income-producing property for the purposes of federal taxation.

Under this method, the annual depreciation deduction that is used to offset the annual income generated by the property is determined by dividing the cost of the property minus its expected salvage value by the number of years of anticipated useful life.

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5 years for residential rental property) using straight-line depreciation.
Allowing for an immaterial difference in the initial year, North Carolina's convention for bonus depreciation is essentially straight-line depreciation over six years, regardless of the modified accelerated cost recovery system (MACRS) recovery period.
As a general rule, the cost of commercial real estate improvements is recovered over 39 years via straight-line depreciation.
There are four possible accounting methods, all of which employ straight-line depreciation with various lives (four or five years) and with various salvage values ($0 or $1,000).
Interest expense for a finance lease is calculated using the effective interest method, and depreciation expense is typically measured using straight-line depreciation.
A building, termed "section 1250 property", is generally 39-year property eligible for straight-line depreciation and equipment or furniture termed "section 1245 property", is personal property.
The two companies use different depreciation policies: HJ depreciates its noncurrent assets using straight-line depreciation at the rate of 20 per cent of cost with no residual value; KL uses the reducing-balance method at 25 per cent per annum.
The straight-line depreciation method is used for the new plant for its useful-life of 10 years.
However, the IRS looks more closely at a business choosing alternative depreciation methods, even straight-line depreciation for newly-acquired property, rather than using the no-questions-asked modified asset cost recovery system.
2006) with an aggregate historic cost of $11,000m, aggregate depreciated historic cost of $3200m, depreciation of $538m, and it uses the straight-line depreciation methodology.
Although straight-line depreciation is permitted for tax purposes, many businesses are advised to use accelerated methods of depreciation.
During the first six years the taxpayer depreciated $323,064 of the building using 39-year, straight-line depreciation.