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Declining Balance Depreciation
The declining balance method is an accelerated depreciation method. Using this method the Book Value at the beginning of each period is multiplied by a fixed Depreciation Rate. The declining balance calculation considers the salvage value in the depreciation of each period. Typically, the last year of depreciation would be to adjust to the salvage value that would be used under the straight line method of depreciation.
As stated, declining balance methods of depreciation are accelerated. This means that early years of depreciation under this method are greater than just straight line expensing. Because of this, many companies switch to straight line once straight line depreciation methods create a larger expense.
Companies typically may use two two different declining balance depreciation methods:
1. 150% declining balance
2. 200% (double) declining balance
