Depreciation schedule
Each year in the life of a depreciable asset, some of its cost is charged against income; just how much is charged each year is determined by the depreciation schedule.
Straight line depreciation (SL). The simplest schedule, so-called "straight line" depreciation spreads depreciation expenses evenly across an asset’s depreciable life: A $100 asset fully depreciated over 5 years (and having no residual value) would allow the owner to claim $20 depreciation expense each year for five years. Other depreciation schedules call for different percentages in each year, usually "accelerating" depreciation by charging relatively more in early years, and relatively less in later years.
MACRS: Many US companies use the 1986 modification of the 1981 Accelerated Cost Recovery System (ACRS) for several classes of assets, known as MACRS. MACRS is thus only for US use. MACRS specifies different schedules for calculating depreciation expense for several kinds of assets: Computing equipment falls into the "5-year class" of property, along with most other office equipment and automobiles. MACRS thus prescribes a 60 month depreciable life for computers, spread across 6 fiscal years (the 60 month period is usually started at the midpoint of year 1. There are several variations and options on MACRS schedules but the primary usage is to apply the double declining balance (DDB) method (see below), using a mid year-1 start. Residual value (salvage value) is ignored. MACRS (along with DDB and SOYD methods, below), is a form of accelerated depreciation, in which relatively more depreciation expense is claimed early in the depreciable life, and relative less is claimed later in the life.
Double declining balance method (DDB). This is a form of accelerated depreciation that prescribes twice an annual rate of depreciation twice that of the straight line method. Under the DDB method, twice the straight line rate is applied each year to the remaining undepreciated value of the asset.
Sum -of-the -Year’s Digits (SOYD): An accelerated method of depreciation based on an inverted scale of total digits for the years of depreciable life. For five years of life, for example, the digits 1,2,3,4 and 5 are added to produce 15. The first year’s rate becomes 5/15 of the depreciable cost (33.3%), the second year’s rate is 4/15 of depreciable cost (26.7%), the third year’s rate 3/15, and so on.
The table below compares depreciation percentages applied each year against the depreciable cost of an asset having with a 5-year depreciable life. (It shows % depreciated per year).
| Schedule | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 |
| Straight Line | 20.00 | 20.00 | 20.00 | 20.00 | 20.00 | 0.00 |
| MACRS | 20.00 | 32.00 | 19.20 | 11.52 | 11.52 | 5.76 |
| Dbl Decl Bal | 40.00 | 24.00 | 14.40 | 8.64 | 5.18 | 0.00 |
| Sum of Yrs Digits | 33.33 | 26.67 | 20.00 | 13.33 | 6.67 | 0.00 |
Note that MACRS here refers to a 5-year depreciable life, but which is spread across 6 fiscal years, beginning at the midpoint of year 1.
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