gen-state-depreciation-methods-precisely-and-explain-why-it-matt-1a36

State depreciation methods precisely and explain why it matters in 2-3 sentences.

# Depreciation Methods 1. **Straight-line**: Equal expense each year (Cost - Salvage Value) ÷ Useful Life 2. **Declining balance**: Fixed percentage applied to decreasing book value each year 3. **Units of production**: Expense based on actual usage/output relative to total capacity 4. **Sum-of-years-digits**: Accelerated method using fraction of remaining life ## Why It Matters The choice of depreciation method directly impacts reported profits, tax liability, and asset values on the balance sheet. Companies using accelerated methods show lower profits initially (reducing taxes) while straight-line spreads costs evenly, and the method chosen must reflect how the asset actually delivers economic value over time.