Meaning
An accounting method to track an asset’s declining value over its useful life.Definition
The Diminishing Balance Method depreciates an asset by applying a fixed percentage to its remaining book value each year, leading to higher charges initially.How It Works
Each year, a constant depreciation rate is applied to the asset’s reduced book value (cost minus accumulated depreciation). This results in larger depreciation amounts early on.Benefits
It aligns with the idea that assets lose more value in early years and can offer tax benefits through higher initial write-offs.Author
