declining balance method
- noun
- /dɪˈklaɪnɪŋ ˈbæl.əns ˈmɛθ.əd/
- Specialized
:
método de saldo decreciente
- The declining balance method results in higher depreciation charges in the initial years compared to other methods.
Examples
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Our company switched to the declining balance method to accelerate asset depreciation expenses for tax purposes.
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Using the declining balance method can more accurately reflect the usage and aging of certain equipment.
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The declining balance method is commonly used for asset depreciation.
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Many companies prefer the declining balance method for tax purposes.
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Our company switched to the declining balance method to accelerate asset depreciation expenses for tax purposes.
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The declining balance method results in higher depreciation charges in the initial years compared to other methods.
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Many companies prefer the declining balance method because it allows them to report larger expenses early in the asset's life.
Synonyms
A way to reduce an asset's remaining value by a fixed percentage each year
How Accelerated
- Specialized
- Specialized
Surface Forms
Morphology
The phrase literally combines 'declining' + 'balance' + 'method', so a learner who knows the words can infer it refers to a way of calculating or applying a method where a balance gets smaller over time (a general sense of reducing value). However, the specific accounting meaning—subtracting a fixed percentage from the current book value each year and its depreciation timing implications—is technical and not fully predictable from the constituents alone, so it is only partially transparent.
Etymology
The accounting term declining balance method paints a simple picture: imagine a pile of money, the balance, that is reduced each year by the same percent, which is the declining part. Because you take the same percent from a smaller balance each year, the amount taken is larger at first and smaller later, so it shows a bigger 'loss in value' in early years.
