AIPB Mastering Depreciation Practice Test

The straight-line method is considered the simplest depreciation method because it evenly allocates the cost of an asset over its useful life. This method requires minimal calculations, as you only need to determine the initial cost of the asset, the salvage value, and the estimated useful life. The depreciation expense is calculated by subtracting the salvage value from the cost and then dividing that amount by the useful life in years.

This straightforward approach makes it easy for individuals and businesses to apply, understand, and communicate among stakeholders, as the same amount is deducted each year. This predictability aids in budgeting and financial planning.

In contrast, other methods, such as the declining balance and double declining balance methods, involve more complex calculations that account for varying depreciation based on the asset's book value, making them more difficult to apply for some users. The sum-of-the-years'-digits method also requires a more intricate calculation involving fractions of the asset's useful life, adding to its complexity.