Depreciation Methods

ADS - Alternative Depreciation System, the depreciation is figured the same, as MACRS except the straight-line method is used, over the ADS recovery period, with the appropriate convention. See ADS.

Straight Line - Cost divided by the asset's life. This method is usually used for book depreciation.

Double Declining - 150% or 200 % Method. Most of the depreciation is taking at the beginning of the asset's life.

MACRS - The modified accelerated cost recovery system. Tax method used for assets placed in service after December 31, 1986. See MACRS.

Sum of the Years Digits -This method takes most of the depreciation in the early years of the asset's life. The asset's cost is multiplied by a fraction calculated by adding the years in an asset's life together to become the denominator. The numerator is the years in the asset's life in their reverse order.