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Accounting
Straight-Line Depreciation
The simplest way to spread the cost of a fixed asset evenly over its useful life.
Straight-line is the most common method because it's easy and matches the matching principle. The formula is (Cost − Residual Value) ÷ Useful Life in years.It's like paying for a gym membership in 12 equal monthly payments instead of one giant bill.
Real world: A $12,000 delivery van with a 5-year life and $2,000 leftover value gets $2,000 of depreciation expense every year ($10,000 ÷ 5).
💡 Straight-line depreciation is perfect when the asset gets used up at a steady pace every year.