Which depreciation method records the same amount of depreciation expense each accounting period?

Which depreciation method records the same amount of depreciation expense each accounting period?

• A. Accelerated depreciation.
• B. Units of production.
• C. Straight-line depreciation.
• D. No depreciation method records the same amount.

Answer: (C)

Depreciation methods determine how an asset’s cost is spread over its useful life. Straight-line depreciation does this evenly, allocating the cost minus any salvage value across each period of the asset’s life, so the same amount is expensed every year. For example, if an asset costs 100,000 with a 10,000 salvage value and a 10-year life, annual depreciation would be (100,000 − 10,000) / 10 = 9,000 per year. Accelerated methods front-load more expense in early years and less later, so the amount isn’t the same each period. Units of production bases depreciation on actual usage, causing the expense to vary with how much the asset is used. Therefore, the method that records the same amount each period is straight-line depreciation.

Depreciation methods determine how an asset’s cost is spread over its useful life. Straight-line depreciation does this evenly, allocating the cost minus any salvage value across each period of the asset’s life, so the same amount is expensed every year. For example, if an asset costs 100,000 with a 10,000 salvage value and a 10-year life, annual depreciation would be (100,000 − 10,000) / 10 = 9,000 per year. Accelerated methods front-load more expense in early years and less later, so the amount isn’t the same each period. Units of production bases depreciation on actual usage, causing the expense to vary with how much the asset is used. Therefore, the method that records the same amount each period is straight-line depreciation.