Under which depreciation method are the annual depreciation charges constant over the asset’s useful life?

Introduction / Context:
Depreciation methods shape reported earnings and tax shields. Knowing which method produces constant annual charges helps forecast costs and compare projects with similar asset bases.

Given Data / Assumptions:

• Asset has a finite useful life and a salvage value.
• Annual depreciation is recognized for financial reporting.

Concept / Approach:
The straight line method spreads the depreciable base uniformly over the useful life. Thus, yearly depreciation expense is a constant amount: (Cost - Salvage) / Life. Accelerated methods load higher depreciation in early years and lower later on.

Step-by-Step Solution:
1) Define depreciable base: DB = Cost - Salvage.2) Straight line annual depreciation: DB / n each year; constant.3) Declining balance and double-declining balance: apply constant percentage to book value; charges decline over time.4) Sum-of-the-years’-digits: weighted declining schedule; also front-loaded.5) Units of production: varies with actual usage, not constant.

Verification / Alternative check:
Comparing depreciation schedules across methods demonstrates straight line’s uniform annual amounts.

Why Other Options Are Wrong:
Declining balance (including double-declining) and sum-of-the-years’-digits are accelerated; annual depreciation declines over time.
Units of production depends on output or hours, not constant per calendar year.

Common Pitfalls:
Confusing constant percentage (declining balance) with constant amount (straight line). The percentage is constant, but the dollar amount is not.

Final Answer:
Straight line method