Limitations of Straight Line Method
Even though the straight line method is simple and easy to apply it suffers from certain limitations which are given below:
- This method is based on the faulty assumption of same utility of the asset in different accounting years;
- As the years go by the work efficiency of the asset decreases and repair and maintenance expense increases. Hence, under this method total amount charged against profit on account of depreciation and repair taken together will not be uniform throughout the life of the asset, rather it will keep on increasing from year to year.