Straight-Line Depreciation Method Law and Legal Definition

Straight-Line depreciation method is the simplest and most commonly used method of depreciation. This method writes off the cost or other basis of the asset by deducting the expected salvage value from the initial cost of the capital asset, and dividing the difference by the total productive years the asset can be reasonably expected to benefit the company.

The following is an example of a case law on the straight-line depreciation method:

Under straight-line depreciation, the cost of any item of equipment is ratably spread over its estimated useful life, and through these annual depreciation charges it is sought to recoup the initial capital outlay by the time the particular piece of equipment must be withdrawn from service. Thus under this method the net book value of any particular asset becomes less and less as the accumulated depreciation on account of this asset becomes greater and greater. Of course the costs of any capital additions or betterments are added to the ledger value of the particular asset, and hence are in turn depreciated. [Boston & M. R. R. v. Comm'r, 206 F.2d 617, 618-619 (1st Cir. 1953)].