When employing straight-line depreciation, how is the depreciable cost calculated?

In the context of straight-line depreciation, the depreciable cost is determined by subtracting the salvage value of an asset from its initial cost. The salvage value represents the estimated residual value of the asset at the end of its useful life. By using this method, the annual depreciation expense is consistent throughout the asset's lifespan, providing a straightforward way to allocate the total cost of an asset over time.

Calculating depreciable cost in this way allows for a clear understanding of how much value the asset will lose each year, based on its purchase price and what it is expected to be worth at the end of its useful life. This method is widely utilized in accounting and financial reporting because of its simplicity and effectiveness in asset management.