Which method of depreciation calculation most likely gives a company the greatest tax benefit the soonest?

• Declining balance
• Activity-based
• Straight line
• Salvage

• Declining balance

Declining balance is a method of recording higher depreciation expenses in the earlier years of a useful life of an asset and recording smaller depreciation expenses in the later years of the asset life. The decrease in the value of asset results to depreciation which decreases the amount of taxes a company pays. Increase in depreciation expense lower the taxes to be paid and increase in depreciation expense, increase the tax paid by the company. Hence, declining balance as a method of calculating depreciation gives a company the greatest tax benefit earlier since it records higer depreciation expense in earlier years.