An asset often loses more of its value early in its lifetime. A method that exhibits this dynamic is desirable.

Assume an asset depreciates from price to salvage value in years. First compute the sum-of-years as . The depreciation for the years after the asset’s purchase is:

For the th year of the asset’s use, the annual depreciation is:

For our example, and the sum of years is . The depreciation during the first year is

Table 53.2 describes how Declining Balance would depreciate the asset.

As expected, the value after years is .