This method depreciates an asset by a fixed percentage every month until the asset value is reduced to zero. The fixed percentage is calculated from the original cost price of the asset.
For example, if you enter an asset and with a Cost Price of ú10,000 and you want this to be depreciated over a four-year period then you would enter 25% as the annual Depreciation Rate. Every month exactly the same amount will be depreciated from the assetÆs value until it is reduced to zero. This is shown in the table below:
Asset A: Straight Line Depreciation Method
Cost   Price  Dep. Rate Dep. Amount New Book Value
Year 1  ú10,000  25%  ú2,500  ú7,500
Year 2  ú10,000  25%  ú2,500   ú5,000
Year 3  ú10,000  25%  ú2,500  ú2,500
Year 4  ú10,000  25%  ú2,500  ú0
Sage Line 50 is designed to depreciate your assets every month, so in the case above, the annual depreciation rate of 25% is simply divided by twelve to give a monthly depreciation rate of 2.08%. At the end of each year this monthly rate amounts to 25% of depreciation just the same.

This method depreciates the value of an asset by a fixed percentage each year just like the straight-line method but this fixed percentage is applied each time to the new reduced æbook valueÆ of the asset. Theoretically, the book value will never reach zero, but for all practical purposes, the write off value of an asset is reached by using a realistic percentage.
For example, if you have an asset worth ú10,000 which is to be depreciated at the rate of 25% a year. The annual depreciation calculation using the reduced balance method is as follows:
Asset A: Reduced Balance Depreciation Method
Book Value Dep. Rate Dep. Amount New Book Value
Year 1 ú10000  25%  ú2500  ú7500
Year 2  ú7500  25%  ú1875  ú5625
Year 3  ú5625  25%  ú1406  ú4219
Year 4  ú4219  25%  ú1054  ú3165 etc.
You can see from this example that, in comparison to the straight-line method, the reducing balance method takes longer to depreciate an asset using the same annual depreciation rate. In this example, after four years at 25% the asset has been written off by the straight-line method but has a remaining book value of ú3165.
Because Sage Line 50 calculates the depreciation every month the annual rate of depreciation is calculated as a reducing balance æmonthlyÆ. In the example above, the first annual depreciation amount of ú2,500 will occur, but the first month will show a greater value of depreciation than the next and so on.

Select this depreciation type to make one last posting that depreciates the remaining value of the asset, whatever it is, in one go. The Book Value is reduced to zero and has therefore been effectively written off in your accounts.