For example, if a company purchases machinery for $100,000 and uses the double declining-balance method with a straight-line rate of 10%, the depreciation expense in the first year would be $20,000 (20% of $100,000). In the second year, the depreciation expense would be $16,000 (20% of the remaining book value of $80,000), and so on, until the asset's value is fully depreciated or reaches its salvage value.
Our accountant recommended using the declining-balance method for our new equipment to maximize our depreciation deductions in the early years.
