 Hello, in this lecture, we will define accelerated depreciation method. According to fundamental accounting principles, Wilde 22nd edition, the definition of accelerated depreciation method is method that produces a larger depreciation charges in the early years of an asset's life and smaller charges in its later years. So in order to understand an accelerated depreciation method, we first need to know what a depreciation method is and have a bench line to compare that depreciation method to meaning the straight line method is usually the benchmark that we will compare other methods to including this type of method and accelerated depreciation type method. Therefore, when we're saying that we have more depreciation in the early years of the asset's life, that is, of course, in comparison to a straight line method. Let's take a look at an example. We have our property plant and equipment being a tank here, we're going to use that tank in some way in order to help us generate revenue in the future. And that's why it's going to be a fixed asset property plant and equipment, we're going to put it on the books in this case at 257,500. When we reduce the value of that equipment, as we use it, we call that depreciation. Why? Because we don't have less tanks later on, we're not going to say as we do with supplies, that we have less tanks, we still have the one tank, but the value has gone down. Therefore, we're going to tell our reader, hey, here is the price of the tank, here is what we believe it's gone down in value or the allocation of that cost book value being the subtraction of the cost, less the accumulated depreciation. One way to calculate this the most basic way to calculate in the straightforward way, most logical way, most would think of when trying to allocate the depreciation would be a straight line method in which case we would take the cost and we're going to subtract the salvage value, that's what we think it's going to be worth after the useful life is over, meaning we can kind of scrap it for that amount gives us the amount to be depreciated over the useful life. And we're going to say that is four years, meaning we're going to use this tank for four years. And then we believe it'll have a salvage or selling value of the 20,000 at the end of that straight line depreciation per those four year useful life then would be 59,375. That's a straight line. That's the baseline method that we can then compare an accelerated method to, for example, a double declining method is a form of accelerated method. So if we took one divided by four, the number of years one divided by the number of years, we'd have a 25%. That's the straight line method, not taking into account the salvage value that we calculated, that's the rates, the straight line rate. If we use some accelerated method, we could just take that rate and multiply it times two, that would be a double declining method and accelerated format, that would give us a double declining rate. Then we could say the cost is that 257.5. Let's take the twice the rate, rather than the straight line rate, providing us with depreciation in year one of 128 750. And notice, of course, that that's going to result in a much larger accumulated depreciation in the early years, and it will result in the book value being less. If we continued that process, it would look something like here this, we have the straight line, which has the same depreciation for each of the four years of the useful life cost is obviously the same, the accumulated depreciation is going up at a constant rate, meaning the book value is going down at a constant rate, as opposed to the double declining balance, where we see a huge amount of depreciation in year one and less depreciation in year four, then under the straight line method, accumulated depreciation is going up, but not at a constant rate. And the book value we can see does end in the same location that 20,000, but we can see that we have higher depreciations in year one, and lower depreciations in year four using the accelerated method, in this case being the double declining, as compared to the benchmark, the straight line method.