Page 284 - Analysis, Synthesis and Design of Chemical Processes, Third Edition

From Figure E9.21 it is seen as follows.

1. The depreciation values obtained from the sum of the years’ digits are similar to those obtained
from the double declining balance methods.
2. The double declining balance method has the largest depreciation in the early years.
3. The straight-line method represents the slowest depreciation in the early years.

The SOYD and the DDB methods are examples of accelerated depreciation schemes (relative to the
straight line). It is shown in Section 9.8 that accelerated depreciation has significant economic advantages
over the straight-line method.

Capital investment can be depreciated only in accordance with current tax regulations.

9.7.3 Current Depreciation Method: Modified Accelerated Cost Recovery System (MACRS)

The current federal tax law is based on MACRS, using a half-year convention. All equipment is assigned
a class life, which is the period over which the depreciable portion of the investment may be discounted.