Here's how it works:

• The cost of the asset is divided by the number of years it is expected to be used.
• The resulting amount is the depreciation expense that is recorded each year in the company's financial statements.
• The straight-line method assumes that the asset's value declines at a constant rate over time, so the depreciation expense is the same each year.
• For example, if a company purchases a machine for $100,000 and expects it to last 10 years, the straight-line depreciation expense would be $10,000 per year (100,000 / 10 years).

Straight-line depreciation is a simple, easy-to-use method, but it does not always reflect the actual decline in the asset's value over time.