Final answer:
Accelerated methods of depreciation include the Declining Balance Method and the Sum-of-the-Years'-Digits Method, which allocate higher depreciation expenses in the early years of an asset's life.
Step-by-step explanation:
The methods of depreciation that are considered accelerated include the Declining Balance Method and the Sum-of-the-Years'-Digits Method. Both of these methods depreciate assets faster than the traditional Straight-Line Method. The Declining Balance Method multiplies the book value of an asset at the beginning of each year by a fixed rate, which results in higher depreciation expenses in the earlier years of an asset's life. The Sum-of-the-Years'-Digits Method involves a more complex calculation where depreciation is based on the remaining life of the asset as a proportion of the sum of the years' digits.Such accelerated depreciation methods may be beneficial for companies that expect an asset's productivity or utility to decrease rapidly over time or for tax benefits, as they allow for larger depreciation deductions in the initial years following the asset's acquisition.Accelerated methods of depreciation are used to allocate the cost of an asset over its useful life and reduce its book value more rapidly than traditional depreciation methods.
Three popular accelerated methods are:Double-Declining Balance Method: This method charges a higher depreciation expense in the earlier years of an asset's life and gradually reduces it over time. It is suitable for assets that generate more revenue in their initial years.Sum-of-the-Years'-Digits Method: This method assigns higher depreciation expense to early years and progressively reduces it. It is based on a fraction where the numerator is the remaining useful life of the asset and denominator the sum of the digits of the asset's useful life.Units-of-Production Method: This method bases depreciation on the actual usage or output of the asset rather than time. It is suitable for assets that wear out based on usage, such as manufacturing equipment or vehicles.