Diminishing balance method of calculating depreciation
Also known as reducing balance method.
Under this method, the amount of depreciation charged for an asset decreases year after year. This is because it is calculated as a percentage of net book value (which decreases) rather that cost (which remains the same). Net book value = Cost less aggregate depreciation Aggregated depreciation = Sum of all depreciation charged for an asset since it was bought. (Aggregated depreciation is also known as accumulated depreciation) This method of depreciation does not take into account scrap value and estimated useful life. 
Calculation of annual depreciation:
An asset is bought for $25 000. It has been decided that the asset be depreciated at the rate of 20% per annum using the reducing balance method.
Depreciation for the first 3 years of ownership will be as follows:
Depreciation for the first 3 years of ownership will be as follows:
Reducing balance method: Month to month basis v/s Full year basis Let us consider the following example (same we used for straight line method):
A vehicle was bought for $12 000 on 1 July 2015. It was depreciated by 20% per annum using the reducing balance method. It was sold on 30 November 2019. The business closes its accounts on 31 December every year. Annual depreciation calculated on a month to month basis and on a full year basis are shown below: 

Other parts of chapter "Accounting for depreciation and disposal of noncurrent asset" on this site:
Introduction, causes and reasons for depreciation
Introducing methods of calculating depreciation
Straight line method of calculating depreciation
Revaluation method of calculating depreciation
Introduction, causes and reasons for depreciation
Introducing methods of calculating depreciation
Straight line method of calculating depreciation
Revaluation method of calculating depreciation