What does the declining balance method of depreciation rely on?

The declining balance method of depreciation is a technique that allocates the cost of an asset over its useful life in a way that results in larger depreciation expenses in the earlier years and smaller expenses in later years. The key aspect of this method is that it applies a constant depreciation rate to the asset's beginning-period book value.

This approach means that each year, the depreciation expense is calculated based on the carrying amount of the asset at the start of that period, rather than the original cost or the depreciated value from the previous period. By using the asset's book value at the start of the period, the depreciation expense can reflect the decreasing value of the asset over time more accurately. This aligns with the idea that as an asset is used and ages, it loses value more significantly in the initial years compared to its later years.

This method contrasts with other forms of depreciation that might use a fixed rate or consider tax policies or salvage value in calculations. The focus here is solely on the asset's book value at the beginning of each period, which is why this choice is the correct answer.