Answer the question below.

Straight-line depreciationcharges an equal amount of depreciation to each accountingperiod. It is themost widely used depreciation method in the U.S. for many years due to its simplicity. The way to calculate the straight line method you first must determine the value of the asset at the end of its useful life then subtract it from the purchase price and then divided by the number of years in the asset's useful life.

Your detail discussion is very good.I wanted to give you an exampleof the importance of the valuation of assets / depreciation and tie it into my Basic Accounting - Major Standards (Going Concern) post.The going concern principle really means that the worth of a company is greater than the liabilities of the company. The worth would include all assets and goodwill if you were considering selling the company. If a loss is forecast for a point in time does not mean your worth is negative and it does not mean you are going out of business. Consider Chrysler where I worked 8 years. They were on the brink of going out of business in the last century but Lee Iaccoca convinced the government to let them borrow money to set things straight. The government agreed because the assets (Historical Cost less Depreciation) of the company was worth more than all the debt. At that time the new product line that needed to be build, Plymouth Minivan, was a potential winner in the test markets. Additionally, anyone who studied the financial statements and bought Chrysler stock at about $1.85 at the low point made a lot of money during the turnaround because they would have seen the worth of the company in assets was more than the debt. The risk was still there but good management completed the turnaround. (On a side note, I took a package buyout from Chrysler and I was given a year's salary, a Plymouth Mini-van, and they froze my contributed money for retirement. I took off half a year and went to all my kids baseball and softball games.)

Can you think of any way a good valuation of inventory or assets would benefit you at a company?