depreciation methods

depreciation methods

Various accounting tools for calculating depreciation.The most common is the straight-line method,in which equal pro rata shares are deducted each year until one reaches $0 or a salvage value, as the circumstances may warrant.The second most common is the doubledeclining balance method.Some accountants still use the sum-of-the-years-digits method,although this is no longer allowed for tax purposes.

Example: Following are three graphs representing the depreciating value of a $10,000 asset with a useful life of 5 years and a salvage value of $0, using the three different methods.