What method is used to calculate depreciation in the case of buildings with a defined economic life?

The straight line method is utilized to calculate depreciation for buildings with a defined economic life because it allocates the cost of the asset evenly across its useful life. This method assumes that the asset will provide equal utility over each year of its life, making it straightforward and easy to apply.

In this method, the total cost of the building is divided by the number of years in its economic life to determine an annual depreciation expense. This approach is particularly useful for real estate and buildings, as they tend to have a long and predictable useful life, allowing for a clear assessment of depreciation over time.

Unlike methods such as the declining balance method, which accelerates depreciation in the earlier years, the unit of production method, which depends on usage levels, and the summation method that might account for multiple components separately, the straight line method offers a consistent and stable calculation that aligns well with the way buildings are typically used and valued in the market over time.