Diminishing balance depreciation, also known as the double-declining balance method, is an accelerated depreciation method where a fixed percentage of the remaining book value of an asset is depreciated each period. The percentage is typically twice the straight-line rate. This method results in higher depreciation expenses in the earlier years and lower expenses in the later years of an asset's useful life.

Under this method, the annual depreciation is calculated by multiplying the asset's beginning book value for the year by the depreciation rate (which is usually 2/estimated useful life). As the asset's value decreases over time, the depreciation amount also decreases until it reaches the asset's residual or salvage value, at which point no further depreciation is taken.

The formula for the double-declining balance method is: [ \text{Annual Depreciation} = \text{Opening Book Value} \times (\text{Depreciation Rate}) ]

This method is often used when assets are expected to be more productive in their early years and less productive as they age. However, it's important to note that the method may not accurately reflect the economic benefit being derived from the asset in all cases, especially if the asset's productivity remains relatively constant over its life. According to the relevant accounting standards, the choice of depreciation method should reflect the pattern in which the economic benefits from the asset are expected to be consumed.