Straight Line Basis

It's how you depreciated a capital expenditure: "Standard Way."

You spent $80 million for a company that puts swear words on the sides of tractors in any language. You think that, in 20 years, it'll be worth $20 million at scrap value just for the steel and the vocabulary. So you depreciate it in a straight line method, the same amount of depreciation each year, so that you depreciate $60 million in value over 20 years, or $3 million a year, each and every year.

That's the straight line method of depreciation, which usually doesn't reflect the actual value declines in capital equipment. That is, if you went to sell your swear word stamper two years after you bought it, you'd likely not get $74 million for it. You'd get way less.

There are other ways to better match market values of entities, but straight line is a common method, even today.

See: Accelerated Depreciation. See: Accelerated Cost Recovery System.