Declining-Balance Depreciation

D_{t} = \frac{d}{n} B V_{t - 1} (d = 1 SL equivalent; d = 2 double)

A constant rate applied to remaining book value. Double declining uses 2/n. Do not depreciate below salvage. May switch to SL on remaining life when that gives a larger deduction.

$d$: Accelerating multiple (1 or 2 typically)
$B V$: Book value

Step-by-step solved example

DDB, n=5, B=$10,000, S=0. Find D1 and D2.

Each year’s depreciation is a fraction of remaining BV.

1. Rate
2/5=0.40.
$d / n = 0.40$
2. Amounts
D1=0.4×10000=4000, BV1=6000, D2=0.4×6000=2400.

Answer: D1=$4000, D2=$2400

10 practice questions

0/10 correct

1.DDB rate for n=8 is

2.150% declining balance uses

3.Never depreciate below

4.BV after t years of DDB (S=0) is

5.First-year DDB vs SL (S=0) is

6.Switch to SL when

7.Units-of-production depreciation uses

8.If S>0, DDB still starts on

9.Book value is

10.n=10 DDB, B=20000, D1 =