In the straight-line method of depreciation, how does the value of an item decrease?

In the straight-line method of depreciation, the value of an asset decreases by the same equal amount each period, typically annually. This method is straightforward and widely used in accounting because it allocates the cost of an asset evenly over its useful life.

For example, if you purchase a piece of equipment for $10,000 and expect it to have a useful life of 5 years with no salvage value, using the straight-line method, you would depreciate the asset by $2,000 each year ($10,000 divided by 5 years). This consistent annual deduction allows for predictable financial planning and reporting.

The approach emphasizes the systematic allocation of the asset's cost rather than fluctuating or variable amounts, making it easier for businesses to assess their depreciation expenses over time.