Straight-line Method Of Depreciation (Noun)
Meaning
(accounting) a method of calculating depreciation by taking an equal amount of the asset's cost as an expense for each year of the asset's useful life.
Classification
Nouns denoting possession and transfer of possession.
Examples
- The company used the straight-line method of depreciation to calculate the annual depreciation expense for the new equipment.
- Under the straight-line method of depreciation, the cost of the asset is spread evenly over its useful life, resulting in equal annual depreciation expenses.
- The straight-line method of depreciation is the most common method used by businesses to calculate depreciation expenses, as it is simple and easy to apply.
- The financial statements showed a depreciation expense of $10,000 per year for the next five years, calculated using the straight-line method of depreciation.
- The accountant chose the straight-line method of depreciation for the company's new vehicle, as it was expected to have a useful life of 10 years and a residual value of $5,000.