# Depreciation methods

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

Section: Multi-book and fixed assets · Canonical: https://intubu.intuitivecapital-dai.com/docs/depreciation-methods

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.