The American term used to describe amortization.
Straight Line Amortization
Straight-line amortization expenses the same amount to expense each period over the useful life of the capital asset. There is a 2 step process used to calculate the amortization expense:
a) First calculate the amortization cost by subtracting the asset’s salvage or residual value from its total cost.
b) Secondly, divide this difference by # of years this asset will be useful.
The simple formula is summarized as:
Amortization Expense = (Total Cost of Capital Asset – Salvage Value) / # of Useful Years