The linear and non-linear depreciation methods are used to calculate depreciation for tax accounting. The linear method used in tax accounting corresponds with the linear method used in standard accounting.
When using the non-linear method, the accrued monthly depreciation for the asset is defined as the product of the remaining value of the asset and the depreciation rate. The depreciation rate is defined by the formula: K = (2 / n) * 100%, where n = the useful life of the asset in months (as in the Reducing balance method).
When the residual value of the asset reaches 20 percent of its original value, the residual value is used as the base value in all subsequent depreciation calculations. The monthly depreciation amount is defined by dividing the base cost of the asset by the number of months remaining in its service life, as in the linear method.