Accounting Glossary

Straight-Line Depreciation

Definition

The most common depreciation method that allocates an equal amount of depreciation expense each year over the asset's useful life.

Formula

Annual Depreciation = (Cost − Salvage Value) ÷ Useful Life

Example

Machine: Cost $100,000, Salvage $10,000, Life 9 years → $10,000/year depreciation.

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