The correct option is C. Straight-Line Method. Explanation of the Correct Answer The Straight-Line Method of depreciation is a widely used accounting technique that allocates the cost of a tangible asset evenly over its useful life. This means that the same amount of depreciation expense is recorded in each accounting period until the asset is fully depreciated. How the Straight-Line Method Works:

1. Determine the Cost of the Asset: This includes the purchase price and any additional costs necessary to prepare the asset for use (e.g., installation, transportation).
2. Estimate the Useful Life: This is the period over which the asset is expected to be used. It can be measured in years, months, or even hours of operation.
3. Estimate the Salvage Value: This is the estimated residual value of the asset at the end of its useful life, which is the amount the company expects to receive when it disposes of the asset.
4. Calculate Annual Depreciation Expense: The formula for calculating the annual depreciation expense using the Straight-Line Method is:

[ \text{Annual Depreciation Expense} = \frac{\text{Cost of the Asset} - \text{Salvage Value}}{\text{Useful Life}} ]

1. Record the Expense: Each year, the calculated depreciation expense is recorded in the financial statements, reducing the asset's book value and impacting the income statement.

Example Calculation:

• Cost of Asset: $10,000
• Salvage Value: $1,000
• Useful Life: 5 years

Using the formula: [ \text{Annual Depreciation Expense} = \frac{10,000 - 1,000}{5} = \frac{9,000}{5} = 1,800 ] Thus, the company would record a depreciation expense of $1,800 each year for 5 years. Why Other Options Are Incorrect or Weaker:

• A. Declining Balance Method: This method accelerates depreciation, meaning that more expense is recognized in the earlier years of an asset's life and less in the later years. The formula typically used is:

[ \text{Depreciation Expense} = \text{Book Value at Beginning of Year} \times \text{Depreciation Rate} ] This results in varying expenses each period, which contradicts the question's requirement for even allocation.

• B. Units of Production Method: This method bases depreciation on the actual usage of the asset rather than time. The formula is:

[ \text{Depreciation Expense} = \left(\frac{\text{Cost} - \text{Salvage Value}}{\text{Total Estimated Units}}\right) \times \text{Units Produced in the Period} ] Since the expense varies with production levels, it does not provide a consistent expense each period.

• D. Sum-of-the-Years'-Digits Method: This is another accelerated depreciation method that results in higher expenses in the earlier years and lower expenses in the later years. The formula involves calculating the sum of the years of the asset's useful life and applying a fraction to the depreciable base. This also leads to varying expenses, which does not meet the criteria of even allocation.

Revision Summary:

• The Straight-Line Method allocates the cost of an asset evenly over its useful life, resulting in the same expense each period.
• The formula for annual depreciation is: (\frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life}}).
• Other methods like Declining Balance, Units of Production, and Sum-of-the-Years'-Digits result in varying expenses, not consistent ones.
• Understanding the characteristics of each depreciation method is crucial for accurate financial reporting and analysis.