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What is the straight-line method of depreciation?

Practice Questions

Q1
What is the straight-line method of depreciation?
  1. Depreciation expense is the same each year.
  2. Depreciation expense decreases each year.
  3. Depreciation expense increases each year.
  4. Depreciation is not recorded.

Questions & Step-by-Step Solutions

What is the straight-line method of depreciation?
  • Step 1: Understand that depreciation is the process of spreading the cost of an asset over its useful life.
  • Step 2: The straight-line method means you will take the total cost of the asset and divide it by the number of years it is expected to be used.
  • Step 3: This division gives you the amount of depreciation expense to record each year.
  • Step 4: Each year, you will subtract this same amount from the asset's value until it reaches zero or its salvage value.
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