Straight-line depreciation spreads an asset's cost evenly over its useful life, charging the same depreciation expense each period.
Straight-line depreciation is the simplest method: subtract the estimated residual value from the cost and divide by the useful life, giving an equal expense every year. It is the most common approach for financial statements because it is easy to apply and gives a smooth, predictable expense.
It contrasts with declining-balance methods (used for tax capital cost allowance) that front-load the deduction. Because book depreciation and tax CCA usually use different methods, a business's accounting depreciation and its tax deduction for the same asset almost always differ.
A $22,000 asset with a $2,000 residual value and a 10-year life depreciates by ($22,000 − $2,000) ÷ 10 = $2,000 each year, the same amount every period until fully depreciated.
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