Which method of depreciation utilizes the formula Cost - Salvage Value / Useful Life?

The straight-line method of depreciation is a widely used technique to allocate the cost of an asset evenly over its useful life. The formula for this method is indeed structured as follows: (Cost - Salvage Value) / Useful Life.

This formula works by taking the initial cost of the asset, subtracting its estimated salvage value, and then dividing the result by the number of years the asset is expected to be in use. This means that each year, the same amount of depreciation expense is recorded, making it straightforward to calculate and project expenses.

It's particularly effective for assets that have a predictable usage pattern, where the wear and tear is relatively constant over time. This simplicity and consistency are reasons why many businesses prefer the straight-line method for financial reporting purposes.