Which method allocates equal amounts of plant asset net cost to depreciation over its useful life?

Which method allocates equal amounts of plant asset net cost to depreciation over its useful life?

• A. Straightline depreciation
• B. Cash Flow Accounting System
• C. Accounts Payable
• D. Inventory

Answer: (A)

Straight-line depreciation spreads the asset’s net cost evenly over its useful life, so the same depreciation expense is recorded in each period. Net cost typically means cost minus any estimated salvage value, and dividing that amount by the asset’s useful life yields a constant yearly expense. This reflects the idea that the asset contributes to earnings in a steady, equal way over time. Other options aren’t depreciation methods: a cash flow accounting system relates to timing of cash flows rather than allocating cost; accounts payable and inventory are balance sheet accounts and do not describe how depreciation is recorded.

Straight-line depreciation spreads the asset’s net cost evenly over its useful life, so the same depreciation expense is recorded in each period. Net cost typically means cost minus any estimated salvage value, and dividing that amount by the asset’s useful life yields a constant yearly expense. This reflects the idea that the asset contributes to earnings in a steady, equal way over time.

Other options aren’t depreciation methods: a cash flow accounting system relates to timing of cash flows rather than allocating cost; accounts payable and inventory are balance sheet accounts and do not describe how depreciation is recorded.