What method is employed to equally distribute depreciation expenses over asset life?

The straight-line method of depreciation is a widely used approach that allocates an equal depreciation expense for an asset over its useful life. This method operates on the principle that an asset provides equal benefits over each period of its life, making the allocation of depreciation straightforward and predictable.

To use the straight-line method, you first determine the cost of the asset, estimate its residual value (the value at which it can be sold at the end of its useful life), and then divide the depreciable base (cost minus residual value) by the number of periods (usually years) of the asset's useful life. As a result, the annual depreciation expense remains constant, which simplifies financial planning and reporting.

This method is beneficial for companies that prefer stability in their financial statements and want to avoid fluctuations in expense reporting, which can occur with other depreciation methods that allocate costs based on usage or activity levels.

Thus, the straight-line method is effective for ensuring that the expense is equally distributed over the asset's life, aligning with the matching principle in accounting, which aims to match expenses to the revenues they help generate.