What method of depreciation allocates equal amounts of depreciation each year?

The method of depreciation that allocates equal amounts of depreciation each year is Straight-Line Depreciation. This approach is one of the most straightforward and commonly used techniques in accounting. Under this method, the cost of an asset is divided by its useful life to determine the amount of depreciation expense to be recorded annually.

For example, if an asset costs $10,000 and is expected to last for 5 years, the Straight-Line Depreciation calculates an annual expense of $2,000 ($10,000 divided by 5 years). This consistency in expense recognition improves predictability for financial planning and analysis, making it easier for businesses to manage their budgets and financial statements.

Other methods mentioned, such as Units-of-Production, Double-Declining-Balance, and Declining-Balance depreciation, do not allocate the same amount of depreciation each year. The Units-of-Production method varies based on the asset's usage, while Double-Declining-Balance and Declining-Balance methods apply a decreasing rate of depreciation over time, leading to higher expenses in the earlier years and lower expenses as the asset ages. These variations can make it more complex for financial statements and forecasting compared to the simplicity of the Straight-Line method.