| A | B |
|---|
| Book value | Original cost of a plant asset minus the accumulated depreciation |
| Declining-balance method of depreciation | Annual depreciation expense calculated by multiplying the book value at the end of each fiscal period by a constant depreciation rate |
| Sum-of-the-years’-digits method of depreciation | Annual depreciation expense calculated by using fractions based on the number of years of a plant asset’s useful life |
| Production-unit method of depreciation | Annual depreciation expense based on the amount of production expected from a plant asset |
| Modified Accelerated Cost Recovery System | Depreciation method required by the Internal Revenue Service to be used for income tax calculation purposes for most plant assets placed in service after 1986 |
