What Is the Straight Line Method?

By Anders Bylund – Updated Nov 5, 2025 at 11:29 AM EST

Key Points

Straight line method spreads an asset's cost evenly over its life, aiding in clear financial planning.
Using this method simplifies financial statements, making a company's health easier to assess.
Netflix mixes straight line with accelerated depreciation for rapid asset value decline.

Some accounting principles are dead simple. Today, I’ll introduce you to the straight line method for amortization and depreciation of a company's assets over time. The name of the method nearly tells the whole story, but I’ll guide you through the finer details.

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Chart on a chalkboard showing cost and value with a hand drawing an arrow sticking into the bullseye on a target. — Image source: Getty Images.

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Like most businesses, Netflix applies a straight line depreciation schedule to its physical plant, property, and equipment assets. The company provides estimated useful lives of every property type. Buildings default to a 30-year span, and furniture and information technology get a three-year life cycle. So some educated guesswork is still involved, but the actual math works out to simple division.

However, Netflix's video content goes through a radically different accounting process. Every title in the content library is amortized on an accelerated schedule.

Content licensed from other production studios has a useful life matching the agreed window of availability. Most in-house Netflix originals get an estimated life of 10 years. Topical programs, such as talk shows, aren't amortized at all but expensed in full as soon as they hit the screen.

And, in general, the useful value of Netflix's content decays very quickly. The company counts on 90% of the asset's value falling in the first four years. This way, most of Netflix's cash costs for new content will move over to the cost of revenues line on the income statement a couple of years later.

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About the Author

Anders Bylund is a contributing Motley Fool media and technology analyst covering semiconductors, cloud computing, internet infrastructure, quantum computing, and streaming media. Previously, Anders was a systems administrator for Nielsen Technology and CSX, gaining hands-on experience with enterprise-class systems. He was also a freelance writer for Ars Technica, TIME, USA Today, CNN, WIRED, and AOL's Daily Finance. He holds a bachelor’s degree in English and a master’s degree in library and information sciences from Florida State University. He believes in coyotes and time as an abstract.

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Anders Bylund has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.