How is depreciation recorded using the straight-line method? Include the formula and the journal entry.

• A. Depreciation expense = (Cost - Salvage value) / Useful life; Debit Depreciation Expense; Credit Accumulated Depreciation.
• B. Depreciation expense = Cost / Useful life; Debit Accumulated Depreciation; Credit Depreciation Expense.
• C. Depreciation expense = Salvage value / Useful life; Debit Accumulated Depreciation; Credit Depreciation Expense.
• D. Depreciation expense = (Cost + Salvage value) / Useful life; Debit Depreciation Expense; Credit Accumulated Depreciation.

Answer: (A)

Straight-line depreciation spreads the asset’s depreciable cost evenly over its useful life. The depreciable cost is the asset’s cost minus its estimated salvage value, and the annual depreciation expense is calculated as (Cost − Salvage value) ÷ Useful life.

The journal entry to record depreciation for the period is: Debit Depreciation Expense for the calculated amount and Credit Accumulated Depreciation for the same amount. Accumulated Depreciation is a contra-asset account that reduces the asset’s book value on the balance sheet, while Depreciation Expense lowers net income on the income statement. This method yields the same depreciation amount each period, provided salvage value and useful life remain unchanged.