Depreciation is an accounting schedule, not an economic one: it spreads a cost you have already paid across the years that use it. It charges nothing for the money tied up — that is what the capital recovery factor is for — and it is not a forecast of the resale price. Two schedules cover most of the field.

Straight line: $D = \dfrac{C - S}{n}$ — D equals C minus S, over n. $D$ is the depreciation charged each year in dollars per year, $C$ the initial cost, $S$ the salvage value expected at the end, and $n$ the useful life in years. The subtraction is the part people drop: the salvage value is never written off, because it is still there when the life is up. Book value falls in a straight line from $C$ to $S$ and then stops.

Declining balance: $B = C(1 - d)^{k}$, where $B$ is the book value after k years, $d$ the fraction written off each year as a decimal, and $k$ the years elapsed. Read the shape — it is compound interest with the sign turned round. And read the named trap in it: $d$ applies to the remaining book value, not to the original cost. A vehicle at 25% loses $20,000 of an $80,000 cost in year one and only $15,000 in year two, because year two is charged against $60,000.

Two rules that mark exams. Book value under any schedule never falls below the salvage value — the schedule stops when it gets there. And declining balance never quite reaches zero, no matter how many years you run it, which is precisely why tax codes switch methods near the end of an asset's life.

The nugget worth carrying: front-loading is the whole point. Declining balance takes the write-down early, which matches how a truck actually loses value and, where the tax code allows it, moves the deduction forward into years when it is worth more. Same total over the life, different timing — and in this subject, timing IS the money.