Depreciation is a method used to allocate the cost of a tangible asset over its useful life. There are various methods used to calculate depreciation, each suitable for different types of assets and business requirements. The most common methods are: 1. Straight-Line Method This is the simplest and most commonly used method of depreciation. It allocates the cost of the asset evenly over its useful life. The formula for straight-line depreciation is: [ \text{Depreciation Expense} = \frac{\text{Cost of Asset} - \text{Salvage Value}}{\text{Useful Life of Asset}} ] Here, the cost of the asset is the initial purchase price, the salvage value is the expected residual value at the end of the asset's useful life, and the useful life is the period over which the asset is expected to be used. This method is ideal for assets that lose value gradually over time, such