Straight-Line Depreciation – MCQ

Practice Question

Intro to Financial Accounting
Long-Lived Assets
Depreciation Methods
MCQs

What is the formula for calculating depreciation expense using the straight-line method?

  1. (Cost − Residual Value) ÷ Useful Life
  2. (Cost × Useful Life) − Residual Value
  3. (Cost + Residual Value) ÷ 2
  4. (Cost ÷ Residual Value) × Useful Life
Answer +
Correct Answer: A
Explanation +

The straight-line method spreads the cost of a tangible asset evenly over its useful life. The correct formula is:

(Cost − Residual Value) ÷ Useful Life

This approach ensures a consistent expense amount is recorded each year, making it one of the simplest and most commonly used depreciation methods in accounting.