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

32

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

1

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.

1

COMPARISON OF THE TWO METHODS OF

DEPRECIATION