Which depreciation method calculates annual depreciation consistently over the entire useful life of an asset?

The straight-line method is recognized for calculating depreciation consistently over the asset's entire useful life by allocating an equal portion of the asset's cost each year. This approach is straightforward: you start with the initial cost of the asset, subtract the salvage value (the estimated value at the end of its useful life), and then divide that figure by the useful life of the asset in years.

This results in a fixed annual depreciation expense that remains the same throughout the asset's life, making it easy for both accounting and tax purposes. The predictability of the straight-line method allows for simpler budgeting and financial reporting, as businesses can anticipate the same depreciation expense each year.

In contrast, other methods, such as the declining balance method, provide for accelerated depreciation where larger expenses are recognized earlier and then decrease over time. The units of production method ties depreciation expense to the actual usage or production output, leading to variability based on performance rather than time. Lastly, the sum-of-the-years'-digits method also results in accelerated depreciation by assigning a larger depreciation expense in the earlier years and decreasing it as time goes on. Each of these methods serves different strategies for asset management and financial forecasting, but none maintain the consistent annual depreciation characteristic of the straight-line approach.