150% Declining Balance Depreciation
150% declining depreciation, as the name implies, is an accelerated depreciation method. Using this method the Book Value (cost of asset less accumulated depreciation) at the beginning of each period is multiplied by a fixed Depreciation Rate which is 150% of the straight line depreciation rate.
The 150% declining balance calculation takes into consideration the salvage value in the depreciation, Typically the last year of depreciation adjusts to the salvage value, or book value (usually the same amount). At the end of the asset's life.
If the asset is bought during the year, multiple the full year depreciation calculated by the fraction of months the asset is in service. If an asset is bought and placed in service on August 1st, the depreciation calculated would be multiplied by 5/12 - future full years would be calculated normally.
150% Declining Balance Depreciation Example:
Cost of asset $ 30,000 Estimated life 5 years Salvage Value $ 5,000 Straight line depreciation rate 20% 150% declining rate (2 x straight line rate) 30% Method of depreciation: 150% declining balance Period Book Value @ Beg. Of Period Rate of Depreciation Depreciation Accumulated Depreciation Book Value End of Period 1 $ 30,000 30.00% $ 9,000 $ 9,000 $ 21,000 2 21,000 30.00% 6,300 15,300 14,700 3 14,700 30.00% 4,410 19,710 10,290 4 10,290 30.00% 3,087 22,797 7,203 5 7,203 - 2,203 25,000 5,000 Total depreciation $ 25,000