• Methods of Depreciation Accounting

    • Straight-line

    • Declining balance

    • Sum-of-years-digits

    • Sinking-fund

    Declining balance method, as well as the sum-of-the-years-digits, are called as accelerated depreciation methods because, by nature of their calculation, they allow for more depreciation in earlier years and less in later years.

    Rapid depreciation is most useful when the asset is expected to generate larger incomes in the early life of the asset. This allows for greater tax deductions early in the assets life to offset the larger income that the asset produces.