Why is "Applying the straight-line % to the carrying value" a common mistake in Straight-Line Depreciation?

Why it happens: Confusing it with reducing balance. How to avoid it: Straight-line % is always applied to COST, giving the same charge each year. Reducing balance uses carrying value. Source: 9706 Examiner Reports

Why is "Forgetting to deduct the residual value" a common mistake in Straight-Line Depreciation?

Why it happens: Dividing cost by life directly. How to avoid it: Use (cost − residual value) ÷ life when a residual value is given; only the depreciable amount is spread. Source: 9706 Examiner Reports

Why is "Charging a full year in the year of purchase when the policy is month-by-month" a common mistake in Straight-Line Depreciation?

Why it happens: Not reading the policy. How to avoid it: Read the stated policy; under month-by-month, multiply by months owned ÷ 12 in the year of purchase. Source: 9706 Examiner Reports

Why is "Charging depreciation in the year of disposal under a 'none-in-disposal' policy" a common mistake in Straight-Line Depreciation?

Why it happens: Applying a charge every year regardless. How to avoid it: If the policy is 'full year in purchase, none in disposal', charge nothing in the year the asset is sold. Source: 9706 Examiner Reports

Why is "Depreciating below the residual value" a common mistake in Straight-Line Depreciation?

Why it happens: Continuing to charge after the depreciable amount is used up. How to avoid it: Stop when the carrying value reaches the residual value — the depreciable amount has then been fully charged. Source: 9706 Examiner Reports

Why is "Mixing straight-line and reducing balance figures" a common mistake in Straight-Line Depreciation?

Why it happens: Switching method mid-calculation. How to avoid it: Straight-line = same charge each year (on cost); reducing balance = falling charge (on carrying value). Keep them separate. Source: 9706 Examiner Reports

Cambridge International A Levels Accounting (9706)

Straight-Line Depreciation

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Detailed Study Notes

Detailed notes on Accounting for Non-Current Assets for Cambridge International A Levels Accounting, covering key concepts, explanations, examples, and exam-focused revision points.

Straight-Line Depreciation — Cambridge AS & A Level Accounting 9706 Study Notes (2026-2028)

The most common method — an equal charge every year. Learn the two ways it is expressed (a percentage of cost, or (cost − residual value) ÷ life), how to build a depreciation schedule, how to handle part-year depreciation, and when straight-line is the right choice.

At a glance

Straight-line charges the same depreciation every year of the asset's life.
Method 1: (cost − residual value) ÷ useful life.
Method 2: a fixed % of cost each year (used when no residual value/life is given).
The charge is constant; the carrying value falls in equal steps.
Best for assets used evenly over their life (e.g. fixtures, buildings).
Part-year: charge month-by-month in the year of purchase if the question says so.
Advantages: simple, even charge; disadvantage: ignores that some assets lose value faster early.

What you’ll learn

Mapped to the Cambridge International A Level 9706 syllabus (2026-2028).

1.3.2 — Calculate depreciation using the straight-line method.
1.3.2 — Identify when the straight-line method is most appropriate.
Link 1.3.2 — record depreciation through the provision for depreciation account and financial statements.

How straight-line works

Spread the depreciable amount equally across the useful life.

The straight-line method charges the same amount of depreciation each year. There are two common ways to express it:

Method 1 — using residual value and life: $\text{Annual depreciation} = \frac{\text{Cost} - \text{Residual value}}{\text{Useful life (years)}}$

Method 2 — as a percentage of cost (when a rate is given and residual value is assumed nil): $\text{Annual depreciation} = \text{Cost} \times \text{Rate \%}$

Example. A machine costs $50,000, residual value $5,000, useful life 5 years.

Annual depreciation = (50,000 − 5,000) ÷ 5 = $9,000 per year, every year.

Because the charge is constant, the carrying value falls in equal steps until it reaches the residual value at the end of the asset's life.

Equal depreciation charged every year.
Method 1: (cost − residual value) ÷ useful life.
Method 2: cost × rate% (residual value assumed nil).
Carrying value falls in equal steps to the residual value.

See the full worked example for straight-line depreciation →

The depreciation schedule

Track cost, annual charge, accumulated depreciation and carrying value year by year.

Building a schedule makes the pattern clear. For the $50,000 machine (residual value $5,000, 5 years → $9,000 a year):

Year	Depreciation $	Accumulated depreciation $	Carrying value $
Cost			50 000
1	9 000	9 000	41 000
2	9 000	18 000	32 000
3	9 000	27 000	23 000
4	9 000	36 000	14 000
5	9 000	45 000	5 000

Notice the carrying value at the end ($5,000) equals the residual value — the depreciable amount ($45,000) has been fully charged.

Schedule: depreciation, accumulated depreciation, carrying value each year.
The charge is the same each year.
Carrying value reaches the residual value at the end of the life.
Accumulated depreciation grows by the same amount each year.

See the full worked example for straight-line depreciation →

Part-year depreciation

Charge by the number of months held when the question requires it.

Assets are often bought part-way through the year. Two common policies (the question will tell you which):

Month-by-month basis: charge depreciation only for the months the asset is owned in the year of purchase. E.g. a $24,000 asset (20% straight-line) bought on 1 October, year end 31 December → 3 months → 20% × 24,000 × 3/12 = $1,200.
Full-year-in-year-of-purchase, none-in-year-of-disposal (a common simplifying policy): a full year's depreciation in the year of acquisition and none in the year the asset is sold.

Always read the depreciation policy stated in the question — applying the wrong basis is a frequent and costly error.

Month-by-month: charge for the months owned (e.g. × 3/12).
Or full year in year of purchase, none in year of disposal.
The question states the policy — follow it exactly.
Wrong basis = lost marks across the whole calculation.

See the full worked example for straight-line depreciation →

When straight-line is the right choice

Simple and even — best for assets used steadily over their life.

Advantages:

Simple to calculate and understand.
Gives an equal charge each year, which is easy to budget for.
Suitable for assets that provide even benefit over their life (e.g. fixtures, fittings, buildings).

Disadvantages:

Assumes the asset is used up evenly, which is not true for assets that lose more value early (e.g. vehicles) — for those, reducing balance is better.
The total annual cost (depreciation + repairs) rises over time, because depreciation stays constant while repairs increase as the asset ages.

Choosing a method is about matching: pick the method whose depreciation pattern best reflects how the asset's benefit is consumed, then apply it consistently.

Advantages: simple, even charge, easy to budget.
Suits assets used evenly (fixtures, buildings).
Disadvantage: poor for assets that lose value faster early (use reducing balance).
Choose by matching the pattern of benefit; apply consistently.

Quick recap

Straight-line charges the same depreciation each year.
Annual depreciation = (cost − residual value) ÷ useful life, or cost × rate%.
Carrying value falls in equal steps to the residual value.
Part-year: charge for the months owned (or per the stated policy).
Advantages: simple, even; disadvantage: poor for assets that lose value faster early.
Choose by matching; apply consistently.

Memorise this

Verbatim phrases and definitions Cambridge mark schemes credit.

Straight-line annual depreciation = (cost − residual value) ÷ useful life.
Or = cost × rate% (residual value assumed nil).
Carrying value falls in EQUAL steps to the residual value.
Read the policy: month-by-month vs full-year-in-year-of-purchase.

How it’s examined

Tested on Paper 1 and Paper 2 through calculations of the annual charge, depreciation schedules, part-year depreciation, and the carrying value at a date, plus explaining when straight-line is appropriate (2-6 marks, point-based). The 9706/22 (Feb-Mar 2024) Q2 used straight-line on vehicles with a month-by-month policy.

Sources: Cambridge International AS & A Level Accounting 9706 syllabus (2026-2028); 9706/22 Paper 2 question paper & mark scheme, Feb/Mar 2024 (Q2); 9706 Examiner Reports, 2022-2024. Last reviewed 2026-06-17.

Take this whole topic with you

Step-by-step worked examples — Straight-Line Depreciation

Step-by-step solutions to past-paper-style questions on straight-line depreciation, written exactly the way a tutor would explain them at the board.

Question type:

1Annual charge from residual value (3 marks)
Getting startedDirect calculation• 9706 Paper 1/2 style• straight-line, AO2
Question
A machine costs $48,000, has a residual value of$ 6,000 and a useful life of 7 years. Calculate the annual straight-line depreciation. (3 marks)
Step-by-step solution
1. Step 1
  Depreciable amount = 48,000 − 6,000 = $42,000.
2. Step 2
  Annual depreciation = 42,000 ÷ 7.
  $= \frac{42{,}000}{7}$
3. Step 3
  = $6,000 per year.
Answer
Annual depreciation = $6,000.
Examiner tip
Deduct residual value before dividing by the useful life.
2Straight-line as a % of cost (3 marks)
Getting startedDirect calculation• straight-line, AO2
Question
Equipment costing $20,000 is depreciated at 15% per year on cost (straight-line). Calculate the annual depreciation. (3 marks)
Step-by-step solution
1. Step 1
  Annual depreciation = cost × rate = 20,000 × 15%.
2. Step 2
  = $3,000 per year (the same each year).
Answer
Annual depreciation = $3,000.
Examiner tip
Straight-line % is always on COST (not on carrying value).
3Three-year schedule (5 marks)
Building confidenceMulti-step problem• schedule, AO2
Question
An asset costs $25,000, residual value$ 1,000, useful life 4 years. Prepare a schedule showing depreciation, accumulated depreciation and carrying value for the first three years. (5 marks)
Step-by-step solution
1. Step 1
  Annual depreciation = (25,000 − 1,000) ÷ 4 = $6,000.
2. Step 2
  Year 1: depreciation 6,000; accumulated 6,000; carrying value 19,000.
3. Step 3
  Year 2: depreciation 6,000; accumulated 12,000; carrying value 13,000.
4. Step 4
  Year 3: depreciation 6,000; accumulated 18,000; carrying value 7,000.
Answer
Annual $6,000; carrying values: Y1$ 19,000, Y2 $13,000, Y3$ 7,000.
Examiner tip
Equal charge each year; carrying value falls in equal steps.
4Part-year depreciation (4 marks)
Building confidenceMulti-step problem• part-year, AO2
Question
A business depreciates vehicles at 20% per year straight-line, charged month-by-month in the year of purchase. A vehicle costing $30,000 is bought on 1 October. The year end is 31 December. Calculate the depreciation for the year of purchase. (4 marks)
Step-by-step solution
1. Step 1
  Months owned = October, November, December = 3 months.
2. Step 2
  Full-year depreciation = 20% × 30,000 = 6,000.
3. Step 3
  Part-year = 6,000 × 3/12.
  $= 6{,}000 \times \frac{3}{12}$
4. Step 4
  = $1,500.
Answer
Depreciation in the year of purchase = $1,500.
Examiner tip
Apply the months-owned fraction (3/12) under a month-by-month policy.
5Carrying value at a date (4 marks)
Building confidenceMulti-step problem• carrying value, AO2
Question
A machine bought for $60,000 is depreciated at 10% per year straight-line on cost. Calculate its carrying value after three full years. (4 marks)
Step-by-step solution
1. Step 1
  Annual depreciation = 10% × 60,000 = 6,000.
2. Step 2
  Accumulated depreciation after 3 years = 6,000 × 3 = 18,000.
3. Step 3
  Carrying value = 60,000 − 18,000 = $42,000.
Answer
Carrying value = $42,000.
Examiner tip
Accumulated depreciation = annual charge × number of years (straight-line).
6Total depreciation for two assets (5 marks)
Building confidenceMulti-step problem• straight-line, AO2
Question
Machine A cost $40,000 (residual$ 4,000, life 6 years); Machine B cost $18,000 (residual nil, depreciated at 25% straight-line). Calculate the total annual depreciation charge. (5 marks)
Step-by-step solution
1. Step 1
  Machine A = (40,000 − 4,000) ÷ 6 = $6,000.
2. Step 2
  Machine B = 18,000 × 25% = $4,500.
3. Step 3
  Total = 6,000 + 4,500 = $10,500.
Answer
Total annual depreciation = $10,500.
Examiner tip
Apply the right form to each asset (residual-value method vs %-of-cost).
7Find the useful life (4 marks)
StretchMulti-step problem• straight-line, AO2
Question
A business charges $7,500 straight-line depreciation per year on a machine that cost$ 45,000 with a residual value of $7,500. Calculate the estimated useful life. (4 marks)
Step-by-step solution
1. Step 1
  Depreciable amount = 45,000 − 7,500 = 37,500.
2. Step 2
  Useful life = depreciable amount ÷ annual depreciation = 37,500 ÷ 7,500.
3. Step 3
  = 5 years.
Answer
Useful life = 5 years.
Examiner tip
Rearrange the formula: life = depreciable amount ÷ annual charge.
8Full-year / none-in-disposal policy (5 marks)
StretchMulti-step problem• policy, AO2
Question
A business charges a full year's depreciation in the year of purchase and none in the year of disposal. A machine costing $36,000 (20% straight-line) was bought on 1 April 2024 and sold on 10 May 2027. The year end is 31 December. Calculate the total depreciation charged over its life. (5 marks)
Step-by-step solution
1. Step 1
  Full year in 2024 (year of purchase): 20% × 36,000 = 7,200.
2. Step 2
  Full years 2025 and 2026: 7,200 each.
3. Step 3
  None in 2027 (year of disposal).
4. Step 4
  Total = 7,200 × 3 = $21,600.
Answer
Total depreciation = $21,600 (years 2024, 2025, 2026).
Examiner tip
Under this policy, count full years from purchase to the year before disposal.
9When straight-line suits an asset (4 marks)
StretchWord problem• method choice, AO3
Question
Explain why the straight-line method is suitable for depreciating office furniture. (4 marks)
Step-by-step solution
1. Step 1
  Office furniture provides a fairly even benefit over its life.
2. Step 2
  Straight-line charges an equal amount each year, matching this even usage.
3. Step 3
  It is simple to calculate and easy to budget for.
4. Step 4
  Furniture does not lose value sharply early on, so reducing balance is not needed.
Answer
Furniture is used evenly, so the equal yearly charge of straight-line matches its benefit; it is also simple.
Examiner tip
Match the even charge to the even pattern of benefit.
10Limitation of straight-line (5 marks)
StretchWord problem• evaluation, AO3
Question
Explain a limitation of using the straight-line method for an asset whose repair costs rise as it ages. (5 marks)
Step-by-step solution
1. Step 1
  Straight-line keeps the depreciation charge constant each year.
2. Step 2
  But repair costs rise as the asset gets older.
3. Step 3
  So the total cost of using the asset (depreciation + repairs) increases each year.
4. Step 4
  This uneven total cost can distort the comparison of profit between years.
5. Step 5
  Reducing balance would charge more depreciation early to offset later repairs, giving a more even total cost.
Answer
Constant depreciation + rising repairs → rising total cost over the life; reducing balance gives a more even total cost.
Examiner tip
The high-value point: depreciation + repairs together rise under straight-line as the asset ages.

Model Answers — Straight-Line Depreciation

High-scoring sample answers for straight-line depreciation on the Cambridge IGCSE paper, with examiner-style notes mapping each response to the mark scheme and assessment objectives.

Question 1
9706 Paper 2 style3 marks
Q (3 marks). A machine cost $54,000, with an estimated residual value of$ 9,000 and a useful life of 9 years. Calculate the annual straight-line depreciation.
Model answer
Depreciable amount = 54,000 − 9,000 = $45,000. Annual depreciation = 45,000 ÷ 9 = $5,000 per year.
Why this scores
Marking (point-based, 3). Depreciable amount $45,000 (1); ÷ 9 (1);$ 5,000 (1).
Question 2
9706 Paper 2 style2 marks
Q (2 marks). Fixtures costing $16,000 are depreciated at 12.5% per year straight-line. Calculate the annual depreciation.
Model answer
Annual depreciation = 16,000 × 12.5% = $2,000 per year.
Why this scores
Marking (point-based, 2). Apply % to cost (1); $2,000 (1).
Question 3
9706 Paper 2 style5 marks
Q (5 marks). An asset costs $32,000, residual value$ 2,000, useful life 5 years. Prepare a schedule of depreciation, accumulated depreciation and carrying value for the first three years.
Model answer
Annual depreciation = (32,000 − 2,000) ÷ 5 = $6,000.

Year Depreciation $ Accumulated $ Carrying value $
1 6 000 6 000 26 000
2 6 000 12 000 20 000
3 6 000 18 000 14 000
Why this scores
Marking (point-based, 5). Annual $6,000 (1); correct depreciation each year (1); accumulated column (1); carrying values (2).
Question 4
9706 Paper 2 style5 marks
Q (5 marks). A business depreciates equipment at 20% straight-line, on a month-by-month basis. Equipment costing $45,000 was bought on 1 September. The year end is 31 December. Calculate (a) the depreciation in the year of purchase and (b) the carrying value at that year end.
Model answer
(a) Months owned = September–December = 4 months. Depreciation = 20% × 45,000 × 4/12 = $3,000.

(b) Carrying value = 45,000 − 3,000 = $42,000.
Why this scores
Marking (point-based, 5). 4 months identified (1); full-year $9,000 (1); × 4/12 =$ 3,000 (2); carrying value $42,000 (1).
Question 5
9706 Paper 2 style6 marks
Q (6 marks). A business owns: Machine X (cost $50,000, residual$ 5,000, life 9 years) and Machine Y (cost $24,000, residual nil, 25% straight-line). (a) Calculate the annual depreciation for each. (b) Calculate the total charge to the statement of profit or loss.
Model answer
(a)

Machine X = (50,000 − 5,000) ÷ 9 = $5,000.

Machine Y = 24,000 × 25% = $6,000.

(b) Total depreciation = 5,000 + 6,000 = $11,000 charged to the statement of profit or loss.
Why this scores
Marking (point-based, 6). Machine X method + $5,000 (2); Machine Y method +$ 6,000 (2); total $11,000 (1); correctly to SOPL (1).
Question 6
9706 Paper 2 style6 marks
Q (6 marks). A machine bought on 1 January 2023 for $80,000 is depreciated at 15% per year straight-line on cost. The year end is 31 December. Calculate (a) the depreciation for 2025 and (b) the carrying value at 31 December 2025.
Model answer
(a) Straight-line depreciation is the same each year = 15% × 80,000 = $12,000 (so 2025's charge is $12,000).

(b) By 31 December 2025 the asset has been depreciated for three full years (2023, 2024, 2025). Accumulated depreciation = 12,000 × 3 = 36,000. Carrying value = 80,000 − 36,000 = $44,000.
Why this scores
Marking (point-based, 6). Annual $12,000 (1); 2025 charge$ 12,000 (1); three years identified (1); accumulated $36,000 (1.5); carrying value$ 44,000 (1.5).
Question 7
9706 Paper 2/3 style5 marks
Q (5 marks). A business charges $4,800 straight-line depreciation per year on equipment costing$ 40,000 with a residual value of $4,000. Calculate (a) the estimated useful life and (b) the depreciation rate as a percentage of cost.
Model answer
(a) Depreciable amount = 40,000 − 4,000 = 36,000. Useful life = 36,000 ÷ 4,800 = 7.5 years.

(b) Rate on cost = annual depreciation ÷ cost = 4,800 ÷ 40,000 = 12%.
Why this scores
Marking (point-based, 5). Depreciable amount $36,000 (1); life 7.5 years (2); rate 12% on cost (2).
Question 8
9706 Paper 2/3 style6 marks
Q (6 marks). A business charges a full year's depreciation in the year of purchase and none in the year of disposal. A machine costing $50,000 (10% straight-line) was bought on 1 July 2023 and sold in March 2027. The year end is 31 December. Calculate the total depreciation charged and the carrying value at the date of sale.
Model answer
Annual depreciation = 10% × 50,000 = $5,000.

Under the policy, depreciation is charged for 2023, 2024, 2025 and 2026 (full year in the year of purchase, none in 2027 the year of disposal) = 4 years.

Total depreciation = 5,000 × 4 = $20,000. Carrying value at the date of sale = 50,000 − 20,000 = $30,000.
Why this scores
Marking (point-based, 6). Annual $5,000 (1); identify 4 years 2023-2026 / none in 2027 (2); total$ 20,000 (1.5); carrying value $30,000 (1.5).
Question 9
9706 Paper 2/3 style4 marks
Q (4 marks). Explain why a business might choose the straight-line method to depreciate its office buildings.
Model answer
Office buildings provide a fairly constant benefit over a long, predictable life, so charging an equal amount each year (straight-line) matches the way they are used.

Straight-line is also simple to calculate and gives a predictable, even charge that is easy to budget for, which suits a long-life asset like a building whose benefit does not fall sharply in the early years.
Why this scores
Marking (point-based, 4). Even benefit → equal charge matches (~2); simplicity/predictability (~2).
Question 10
9706 Paper 3 evaluation style6 marks
Q (6 marks). Discuss whether the straight-line method is appropriate for depreciating delivery vehicles.
Model answer
For straight-line. It is simple and gives an equal, predictable charge each year, which is easy to budget for.

Against straight-line for vehicles.

Vehicles typically lose more value in their early years, so an equal yearly charge does not match the actual pattern of value lost.

As vehicles age, repair costs rise; with constant depreciation, the total cost of using the vehicle (depreciation + repairs) increases each year, distorting year-on-year profit comparisons.

The reducing balance method charges more depreciation early and less later, which both matches the faster early loss of value and offsets rising repairs, giving a more even total cost.

Conclusion. Straight-line is acceptable for its simplicity, but for delivery vehicles the reducing balance method is generally more appropriate, because it better matches how vehicles lose value and balances against rising repair costs. The business should choose by matching the method to the asset and then apply it consistently.
Why this scores
Marking (point-based, ~6). For (simplicity/even charge) (~1.5); against (early value loss + rising repairs → rising total cost) (~3); reducing balance comparison + supported conclusion (~1.5).

Year	Depreciation $	Accumulated $	Carrying value $
1	6 000	6 000	26 000
2	6 000	12 000	20 000
3	6 000	18 000	14 000

Key Formulae — Straight-Line Depreciation

The formulae you need to memorise for straight-line depreciation on the Cambridge IGCSE paper, with every variable defined in plain English and a note on when to use it.

Straight-line (residual value method)
$Annual\ depreciation = \frac{Cost - Residual\ value}{Useful\ life}$
$Cost$
full capital cost of the asset
$Residual value$
estimated value at the end of useful life
$Useful life$
number of years the asset will be used
When to use
When a residual value and useful life are given.
Example
(48,000 − 6,000) ÷ 7 = 6,000 per year.
Straight-line (percentage of cost)
$Annual\ depreciation = Cost \times Rate\%$
$Cost$
full capital cost
$Rate%$
straight-line rate applied to cost each year
When to use
When a percentage rate is given (residual value usually assumed nil).
Example
20,000 × 15% = 3,000 per year.

Key Definitions and Keywords — Straight-Line Depreciation

Definitions to memorise and the exact keywords mark schemes credit for straight-line depreciation answers — sharpened from recent examiner reports for the 2026 Cambridge IGCSE sitting.

Straight-line method
Examiner keyword
A depreciation method that charges an equal amount each year of the asset's useful life.
Depreciable amount
Examiner keyword
Cost less residual value — the amount spread equally over the useful life.
Residual value
Estimated value of the asset at the end of its useful life; deducted before dividing by the life.
Part-year (month-by-month) depreciation
Examiner keyword
Charging depreciation only for the months an asset is owned in the year of purchase (× months ÷ 12).
Depreciation policy
Examiner keyword
The rule a business applies for the year of purchase/disposal (e.g. month-by-month, or full year in/none in year of disposal).
Accumulated depreciation
Total depreciation charged to date; under straight-line it grows by the same amount each year.

Common Mistakes and Misconceptions — Straight-Line Depreciation

The traps other students keep falling into on straight-line depreciation questions — taken from recent Cambridge IGCSE examiner reports and mark schemes — and how to avoid them.

✕Applying the straight-line % to the carrying value
9706 Examiner Reports
Why it happens
Confusing it with reducing balance.
How to avoid it
Straight-line % is always applied to COST, giving the same charge each year. Reducing balance uses carrying value.
✕Forgetting to deduct the residual value
9706 Examiner Reports
Why it happens
Dividing cost by life directly.
How to avoid it
Use (cost − residual value) ÷ life when a residual value is given; only the depreciable amount is spread.
✕Charging a full year in the year of purchase when the policy is month-by-month
9706 Examiner Reports
Why it happens
Not reading the policy.
How to avoid it
Read the stated policy; under month-by-month, multiply by months owned ÷ 12 in the year of purchase.
✕Charging depreciation in the year of disposal under a 'none-in-disposal' policy
9706 Examiner Reports
Why it happens
Applying a charge every year regardless.
How to avoid it
If the policy is 'full year in purchase, none in disposal', charge nothing in the year the asset is sold.
✕Depreciating below the residual value
9706 Examiner Reports
Why it happens
Continuing to charge after the depreciable amount is used up.
How to avoid it
Stop when the carrying value reaches the residual value — the depreciable amount has then been fully charged.
✕Mixing straight-line and reducing balance figures
9706 Examiner Reports
Why it happens
Switching method mid-calculation.
How to avoid it
Straight-line = same charge each year (on cost); reducing balance = falling charge (on carrying value). Keep them separate.

Straight-Line Depreciation

Detailed Study Notes

At a glance

What you’ll learn

Quick recap

Memorise this

How it’s examined

Take this whole topic with you

1Annual charge from residual value (3 marks)

2Straight-line as a % of cost (3 marks)

3Three-year schedule (5 marks)

4Part-year depreciation (4 marks)

5Carrying value at a date (4 marks)

6Total depreciation for two assets (5 marks)

7Find the useful life (4 marks)

8Full-year / none-in-disposal policy (5 marks)

9When straight-line suits an asset (4 marks)

10Limitation of straight-line (5 marks)

Straight-line (residual value method)

Straight-line (percentage of cost)

Straight-line method

Depreciable amount

Residual value

Part-year (month-by-month) depreciation

Depreciation policy

Accumulated depreciation

✕Applying the straight-line % to the carrying value

✕Forgetting to deduct the residual value

✕Charging a full year in the year of purchase when the policy is month-by-month

✕Charging depreciation in the year of disposal under a 'none-in-disposal' policy

✕Depreciating below the residual value

✕Mixing straight-line and reducing balance figures