Definition

Noun: A method of calculating depreciation where an equal amount of an asset's cost is expensed each year over its estimated useful life. This results in a constant annual depreciation charge.

Usage

This term is used in accounting and finance to describe a specific, simple technique for allocating the cost of a tangible asset over time. It is the most common and straightforward depreciation method.

Examples

• Noun:
  • The company uses the straight-line method of depreciation for all its office furniture.
  • When calculating the asset's book value, we applied the straight-line method of depreciation over ten years.

Advanced Usage

• "to calculate depreciation using the straight-line method": This phrase describes the action of applying this specific accounting technique.
  • The accountant will calculate depreciation using the straight-line method for the new machinery.

Variants and Related Words

• Straight-line depreciation (n): A common shortened form of the term with the same meaning.
  • Straight-line depreciation is often preferred for its simplicity.

Synonyms

• Linear depreciation: A less common synonym emphasizing the constant, linear reduction in value.

Related Phrases

• Useful life: The estimated period over which an asset is expected to be usable.
• Salvage value: The estimated residual value of an asset at the end of its useful life, which is often subtracted from the cost before applying the straight-line method.

Noun

1. (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