Which depreciation method allows for an accelerated manner of depreciation?

The declining balance method is an accelerated depreciation technique that allows for greater depreciation expense in the earlier years of an asset's life. This method calculates depreciation based on a fixed percentage of the asset's book value at the beginning of each year, rather than the original cost. As a result, since the asset's book value decreases over time, the depreciation expense reflects a larger amount in the earlier years compared to later years.

The reason this method is beneficial for businesses is that it matches the higher utility and expense of an asset during its earlier usage, potentially aligning tax liabilities more favorably in those years. Consequently, the declining balance method is particularly advantageous for assets that quickly lose value or become obsolete.

While other methods, such as straight-line, sum-of-the-years' digits, and units of production methods exist, they do not provide the same level of accelerated depreciation as the declining balance method. The straight-line method distributes depreciation evenly over the asset's useful life, while the sum-of-the-years' digits method also accelerates depreciation but not as aggressively as the declining balance method. The units of production method ties depreciation to actual usage rather than time, which may or may not lead to an accelerated effect depending on the asset's utilization.