When it comes to depreciation, no two businesses are alike. Unlike traditional straight line depreciation where the asset value is costed out to depreciation expense in equal increments over a given life expectancy, accelerated depreciation expenses the cost at higher values during the earlier accounting periods and at a lower amount towards the last half of the asset’s life expectancy.
Straight Line Depreciation
Straight line depreciation is the most traditional form of allocating capital expenditures. The formula essentially takes the value of the asset and divides it by the anticipated life expectancy to determine the depreciation deduction per accounting period.