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Declining Balance Method Depreciation Calculator
Declining Balance Depreciation Schedule
Example - Cost: $575,000.00, Salvage: $5,000.00, Life: 10 years , First Year: 12 months, Factor: 1.5
Year
|
Book Value
Year Start |
Depreciation
Percent |
Depreciation
Expense |
Accumulated
Depreciation |
Book Value
Year End |
| 1 |
$575,000 |
15.00% |
$86,250 |
$86,250 |
$488,750 |
| 2 |
$488,750 |
15.00% |
$73,313 |
$159,563 |
$415,438 |
| 3 |
$415,438 |
15.00% |
$62,316 |
$221,878 |
$353,122 |
| 4 |
$353,122 |
15.00% |
$52,968 |
$274,846 |
$300,154 |
| 5 |
$300,154 |
15.00% |
$45,023 |
$319,869 |
$255,131 |
| 6 |
$255,131 |
15.00% |
$38,270 |
$358,139 |
$216,861 |
| 7 |
$216,861 |
15.00% |
$32,529 |
$390,668 |
$184,332 |
| 8 |
$184,332 |
15.00% |
$27,650 |
$418,318 |
$156,682 |
| 9 |
$156,682 |
15.00% |
$23,502 |
$441,820 |
$133,180 |
| 10 |
$133,180 |
15.00% |
$19,977 |
$461,797 |
$113,203 |
Declining Balance Depreciation Formulas
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. 200% of straight line depreciation, or 2, is most commonly called the Double Declining Balance Method.
The declining balance calculation does not consider the salvage value in the depreciation of each period however, if the book value will fall below the salvage value, the last period might be adjusted so that it ends at the salvage value. When declining balance method does not fully depreciate an asset by the end of its life, variable declining balance method might be used instead.
- Straight-Line Depreciation Percent = 100% / Useful Life
- Depreciation Rate = Depreciation Factor x Straight-Line Depreciation Percent
- Depreciation for a Period = Depreciation Rate x Book Value at Beginning of the Period
- If the first year is not a full 12 months and is a number M months, the first and last years will be calculated
- First Year Depreciation Rate = M/12 x Depreciation Rate
- Last Year Depreciation Rate = (12-M)/12 x Depreciation Rate
Declining Balance Depreciation Example
Suppose you purchase an asset for your business for $575,000 and you expect it to have a life of 10 years with a final salvage value of $5,000. You also want less than 200% of the straight-line depreciation (double-declining) at 150% or a factor of 1.5.
- Straight-Line Depreciation Percent = 100% / 10 = 10%
- Depreciation Rate = 1.5 x 10% = 15%
- Depreciation for a Period = 15% x Book Value at Beginning of the Period
- Depreciation for Period 1 = 15% x $575,000 = $86,250
- For Periods 2 and greater, depreciation is 15% x ($575,000 - Accumulated Depreciation )
- Depreciation for Period 2 = 15% x ($575,000 - $86,250 ) = $73,313
- Depreciation for Period 3 = 15% x ($575,000 - $159,563 ) = $62,316
- Etc ....
Microsoft® Excel® Functions Equivalent: DDB
The Excel equivalent function for Declining Balance Method is DDB(cost,salvage,life,period,factor). With it you can calculate depreciation for the chosen period. "factor" defaults to 2, double declining balance method, but you can change it. To calculate depreciation by the double declining method you can use this calculator setting the factor = 2 or use our Double Declining Balance Method Depreciation Calculator.
(Microsoft® and Excel® are registered trademarks of Microsoft Corporation)
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