What method does the General Depreciation System primarily use for personal property depreciation?

The General Depreciation System (GDS) primarily employs the declining-balance method for personal property depreciation. This method allows for a larger depreciation expense in the earlier years of an asset's useful life, which aligns with how many assets tend to lose value more significantly in their initial years of use. The declining-balance method utilizes a fixed percentage of the asset's remaining book value each year, resulting in a diminishing depreciation expense as the asset ages.

Under GDS, specific rates are often applied based on the asset class, enhancing tax benefits for businesses that invest in capital assets by allowing them to recover costs more quickly. This is particularly useful for managing cash flow and aligning tax deductions with income generation timing. As a result, the declining-balance method is vital for businesses that want to maximize their deductible expenses in the earlier stages of an asset’s life.

The other methods, while associated with depreciation, do not accurately reflect the primary approach of GDS for personal property. The straight-line method provides a consistent expense across the life of the asset, which differs from the accelerated approach of the declining-balance method. Additionally, the mention of a fixed-rate depreciation method may confuse it with the specific calculations involved in GDS, which is not as commonly used