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When you insert a new equipment unit, declining balance is set to the unit’s original cost. The application's computations do not modify the declining balance under this depreciation method.

• Depreciation applies to units from the month and year of the in-service date to the month and year of the retire date. It does not pro-rate partial months.

• Total depreciation taken for the life of the unit cannot exceed the difference between original cost and salvage value. Capitalized costs are not considered in this depreciation method.

The British declining depreciation method is calculated as follows:

1. Subtracts the total amount of depreciation already taken for the life of the unit from the original cost. The difference is the current value of the declining balance. This value is not written back to the database.

2. Computes the current month’s depreciation rate from the following equation:
   
   Rate =
   
   where l = life months.

The current month’s depreciation is the product of the rate and the current value of the declining balance.