Question

Compare and contrast the following three depreciation methods: straight-line depreciation, double-declining depreciation, and modified accelerated depreciation

Answer 1

Straight Line Depreciation - Thanks to its simplicity, straight-line depreciation has been the most commonly used method of depreciation in the United States for many years. A company charges an equal amount of the value of the asset for each accounting period to implement the straight-line rule.
Double-declining depreciation - The double-declining balance method is a type of accelerated method of depreciation that calculates a higher depreciation charge in the first year of the life of an asset and gradually decreases depreciation expenditure in subsequent years.
Modified accelerated depreciation - Annual deductions for depreciation over a specified lifetime shall recover the capitalized cost (base) of tangible property.