Which method calculates depreciation by dividing the gross book value by the useful life of an asset?

The method that calculates depreciation by dividing the gross book value of an asset by its useful life is referred to as the Straight-Line Depreciation method. This approach spreads the cost of an asset evenly over its estimated useful life, making it simple to determine the annual depreciation expense.

By using this method, businesses can easily budget for asset depreciation, providing a clear and consistent expense reflection in financial statements. This uniform approach is particularly beneficial for assets that are expected to provide steady benefits over time, as it ensures that the expense reflects that ongoing utility. In contrast, other methods like the Declining Balance Method and the Units of Production Method offer different calculations that may reflect a more variable or accelerated depreciation pattern, based on usage or an upfront heavy charge in the early years of the asset's life.