Again, Wikipedia has the goods: http://en.wikipedia.org/wiki/Depreciation

The basic idea behind "Declining-balance" depreciation is that an asset loses a fixed percentage of its value each year. For example, suppose that your car costs 10,000 and you reckon that it loses 10% of its value each year. The value of the scrap metal in it is 1,000. After n years the depreciated value of your car is 10000.(1-0.10)^n and for a certain value of n this will be less than 1000: 0.9^n = 0.1 so n = log(0.1)/log(0.9). After that many years, then, the depreciated value of your car is less than its scrap value.