What method allocates an equal portion of the depreciable cost over the asset's useful life?

Straight-line depreciation is a method that allocates an equal portion of the depreciable cost of an asset over its useful life. This approach simplifies accounting by spreading the asset's cost evenly across the period it is expected to be in service.

Under straight-line depreciation, the formula used is typically:

(Initial Cost - Salvage Value) / Useful Life

This means that each year, the same dollar amount is deducted as an expense, making it easy for management and stakeholders to forecast future expenses consistently. It also reflects the wear and tear or usage of an asset over time without significant fluctuations in expense reporting.

This method is particularly useful for financial statements, as it results in a stable and predictable impact on profits and tax liabilities, allowing for easier financial planning and analysis. It is commonly used for many types of assets due to its straightforward application and understanding.