Depreciation methods

Straight line, declining balance, sum-of-years, units of production and MACRS.

Accounting → Fixed assets. Every asset carries a method per book.

• Straight line — equal expense every month over the life. The default and the simplest.
• Declining balance 150% / 200% — accelerated. Automatically switches to straight line once that gives a larger figure, which is standard practice.
• Sum of the years digits — accelerated by a fraction that shrinks each year.
• Units of production — expense follows actual usage rather than time. Needs a total-units figure.
• MACRS GDS — the IRS general depreciation system, using the official Table A-1 percentages. This is what a US federal return expects.

Conventions: half-year (the default), mid-quarter, mid-month and full-month.

Two things worth knowing about MACRS:

• It deliberately ignores salvage value. That is the rule, not an oversight.
• On a five-year asset, year one is 20% — the same as straight line — because of the half-year convention. It accelerates from year two (32%).

Nothing depreciates below salvage. Every method is capped.