How is straight-line depreciation calculated?

Straight-line depreciation is a method used to allocate the cost of an asset evenly over its useful life. This approach assumes that the asset will lose value at a constant rate each year until it reaches its salvage value.

In this context, the correct choice indicates that to calculate straight-line depreciation, one would take the total depreciation—often defined as the initial cost of the asset minus its estimated salvage value—and divide that amount by the total useful life of the asset in years. The result of this calculation yields the annual depreciation expense, which remains consistent each year.

Using this method allows for a systematic and uniform distribution of the asset's cost throughout its useful life, making it easier for businesses to plan for replacement costs and for financial reporting purposes. Thus, the choice reflecting that calculation accurately represents the accepted method for determining straight-line depreciation.