Depreciation formula accounting is the process of allocating the cost of an asset over its useful life. The most common formula used to calculate depreciation is the straight-line method, which divides the cost evenly over a set number of years. Alternatively, companies can opt for accelerated depreciation methods that provide more value up front but spread the rest of the cost out later. This has the benefit of providing a higher tax deduction in earlier periods when profits are more likely to be higher. Ultimately, the goal of depreciation formula accounting is to properly assess the value of an asset over time, allowing businesses to accurately report their financial position.