Straight-Line Depreciation — Quiz

Question 3 • Advanced Financial Algebra

Which statement accurately describes the calculation of depreciation expense in the straight-line depreciation method?

Answer

The depreciation expense increases each year as the asset ages and its efficiency decreases.

The depreciation expense is determined by the market value of the asset at the beginning of each year.

The depreciation expense is calculated as the difference between the salvage value and the book value at the end of the asset's useful life.

The depreciation expense is the same each year, calculated as the difference between the asset's cost and its salvage value, divided by the useful life of the asset.

Explanation

Under the straight-line method, depreciation expense is equal each year. Calculate it by subtracting the asset’s salvage value from its cost, then dividing the result by the asset’s useful life. This matches the choice stating that the same annual expense is based on cost minus salvage value, divided by useful life.

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