• Declining Balance or Fixed Percentage Method \[V_a = V(1-f)^a\] where \[f = 1 - \left(\frac{V_s}{V}\right)^{1/n} \tag{Text-book method}\] The text-book relationship presented in above equation is seldom used in actual practice, because it places too much emphasis on the salvage value of the property and is certainly not applicable if the salvage value is zero.

    In comparison with the straight line method, declining-balance depreciation permits the investment to be paid off more rapidly during the early years of life.

    Double Declining Balance Method: Here \(f\) is two times the depreciation rate of straight line method. i.e., \(f = 2/n\).