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Double Declining Balance Depreciation

Double 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 200% of the straight line depreciation rate.

The double 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.

Double Declining Balance Depreciation Example:

Cost of asset		$       30,000
Estimated life		5 years
Salvage Value		$         2,000
Straight line depreciation rate		20%
Double declining rate (2 x straight line rate		40%
Method of depreciation: double declining balance
Period	Book Value @ Beg. Of Period	Rate of Depreciation	Depreciation	Accumulated Depreciation	Book Value End of Period
1	$                                  30,000	40.00%	$       12,000	$       12,000	$       18,000
2	18,000	40.00%	7,200	19,200	10,800
3	10,800	40.00%	4,320	23,520	6,480
4	6,480	40.00%	2,592	26,112	3,888
5	3,888	-	1,888	28,000	2,000
	Total depreciation		$       28,000