What characterizes double declining balance depreciation?

Double declining balance depreciation is a method of accelerated depreciation that allows for larger depreciation expenses in the earlier years of an asset's useful life. This is accomplished by applying a constant depreciation rate to the asset's declining book value each year, which results in higher depreciation expenses initially and decreasing amounts in later years. This approach reflects the assumption that many assets lose value more quickly at the beginning of their useful life, thus aligning the expense recognition with the asset's usage and revenue generation.

Using this method can also provide tax advantages to businesses, allowing them to write off a larger portion of the asset's cost earlier, potentially improving cash flows in the initial years of the asset's operation. This contrasts with other methods, such as straight-line depreciation, which spreads the cost of the asset evenly over its useful life, leading to consistent depreciation expenses each period.