DEFINITION of 'Annuity Method Of Depreciation'
A method of depreciation centered around cost recovery and a constant rate of return upon any asset that is being depreciated. This method requires the determination of the internal rate of return (IRR) on the cash inflows and outflows of the asset. The IRR is then multiplied by the initial book value of the asset, and the result is subtracted from the cash flow for the period in order to find the actual amount of depreciation that can be taken.
BREAKING DOWN 'Annuity Method Of Depreciation'
The annuity method of depreciation is also commonly referred to as the compound interest method of depreciation. If the cash flow of the asset being depreciated is constant over the life of the asset, then this method is called the annuity method. However, the annuity method of depreciation is not endorsed by GAAP principles.

Accelerated Depreciation
Any method of depreciation used for accounting or income tax ... 
Double Declining Balance Depreciation ...
One of two common methods a business uses to account for the ... 
Appraisal Method Of Depreciation
A form of depreciation calculation that is based upon appraisal ... 
Declining Balance Method
A common depreciationcalculation system that involves applying ... 
Unit of Production Method
A depreciation procedure used for property that is not in continuous ... 
Retirement Method of Depreciation ...
An accounting procedure in which an asset is expensed for depreciation ...

Investing
An Introduction To Depreciation
Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line. 
Personal Finance
Explaining the Declining Balance Method
The declining balance method is a system for calculating an asset’s rate of depreciation against its nondepreciated balance. 
Investing
Internal Rate Of Return: An Inside Look
Use this method to choose which project or investment is right for you. 
Investing
Double Declining Balance Depreciation Method
The double declining balance depreciation method counts the depreciation of a longlived asset’s book value at double the rate of its straightline depreciation. 
Entrepreneurship & Small Business
Calculating the Internal Rate of Return Using Excel
The internal rate of return on investments is explained and illustrated in different investment scenarios. 
Investing
Return on Investment (ROI) Vs. Internal Rate of Return (IRR)
Read about the similarities and differences between an investment's internal rate of return (IRR) and its return on investment (ROI). 
Trading
Understanding Currency Depreciation
Currency depreciation occurs when a currency’s value falls in comparison to other currencies. 
Trading
Depreciation: StraightLine Vs. DoubleDeclining Methods
Appreciate the different methods used to describe how book value is "used up". 
Investing
Understanding Accumulated Depreciation
Depreciation is a rough approximation, in dollar terms, of the wear and tear on an asset. So the accumulated depreciation is the aggregate of the wear and tear on the asset from all prior time ... 
Investing
Understanding Carrying Value
Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value.

What is the tax impact of calculating depreciation?
Understand the tax implications of a company's depreciation. Learn how differences in accounting methods change the amount ... Read Answer >> 
What is the relationship between accumulated depreciation and depreciation expense?
Understand the relationship between accumulated depreciation and depreciation expense. Learn how each one is accounted for ... Read Answer >> 
What are the different ways to calculate depreciation?
Read about some of the different allowable methods of calculating depreciation expenses as allowed by generally accepted ... Read Answer >> 
What are the different ways to calculate depreciation for tangible assets?
Learn what depreciation is and how to calculate it using the straight line method, declining balance method, and the sumofthe ... Read Answer >> 
How is salvage value used in depreciation calculations?
Learn how an asset's salvage value is subtracted from its initial cost to determine the amount by which an asset is depreciated ... Read Answer >> 
Is depreciation only used for tangible assets?
Learn if tangible assets can be depreciated, as well as what other assets are eligible for depreciation so you can account ... Read Answer >>