Declining Balance Method of Depreciation Multiplying the Book Value by a constant depreciation rate at the end of each fiscal period. A plant asset is never depreciated below its estimated salvage value.
Jan 18, 2018
Declining Balance Method of DepreciationMultiplying the Book Value by a constant depreciation rate at the end of each fiscal period.
A plant asset is never depreciated below its estimated salvage value.
CALCULATING DEPRECIATION USING THE DOUBLE DECLINING-BALANCE METHOD
Lesson 21-5, page 562Lesson 21-5, page 562
Estimated Years of Straight-LineDepreciation Estimated Rate of
Expense ÷ Useful Life = Depreciation
100% ÷ 5 = 20%
Straight-Line Double Rate of Declining-Balance
Depreciation 2 = Rate20% 2 = 40%
CALCULATING DEPRECIATION USING THE DOUBLE DECLINING-BALANCE METHOD
Lesson 21-5, page 562Lesson 21-5, page 562
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3. Determine the ending book value.
1. Enter the double declining-balance rate.2. Determine the annual depreciation expense.
4. Transfer the book value to the following year.
4
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CALCULATING THE LAST YEAR’S DEPRECIATION EXPENSE
Lesson 21-5, page 563Lesson 21-5, page 563
32
3. Verify the ending book value.
1. Transfer the book value.2. Determine the last year’s depreciation.
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COMPARISON OF THE TWO METHODS OF
DEPRECIATION