Straight-line depreciation spreads an asset's cost evenly over its useful life. It is the simplest and most common depreciation method: equal deductions each year until the asset reaches its salvage value.
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Pro Tip
For tax purposes, US businesses can use MACRS (Modified Accelerated Cost Recovery System) which front-loads depreciation, giving bigger tax deductions in early years. This is usually more advantageous than straight-line.
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Did You Know?
Under US GAAP, goodwill from acquisitions is no longer amortized (depreciated) on the income statement — it's tested annually for impairment instead. This change in 2001 significantly boosted reported earnings for acquisition-heavy companies.
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