The Accounting Review Vol. 44 No. 2 1969
From Double-Declining-Balance to Sum-of-the-Years'-Digits Depreciation: An Optimum Switching Rule.
Abstract
This article focuses on a new tax legislation to be implemented in the U.S. regarding changes in the established depreciation methods. Until very recently, the consent of the Commissioner had to be obtained for all such changes, with the exception of a change from declining-balance to straight-line depreciation, provided the taxpayer acquired the relevant assets new. That such a switch may prove advantageous to the taxpayer under certain conditions, has been adequately demonstrated in the literature. The author of this article is interested in exploring the possibility of developing an optimum switching rule for this combination of methods, particularly when the declining-balance method is based on double the straight-line rate. The declining-balance methods hold favor because of their larger initial depredation allowances. The principal objection to a straight application of the declining-balance method is that it takes an extremely long period of time to depreciate an asset to a low book value.
- DOI
- 10.2308/tar-4486530
- Volume
- 44
- Issue
- 2
- Pages
- 292-296
- Language
- en
- Sources
- crossref openalex