Declining Balance Method of Depreciation Multiplying the Book Value by a constant depreciation rate at the end of each fiscal period. A plant asset is.

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Presentation transcript:

Declining Balance Method of Depreciation Multiplying 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 562 EstimatedYears of Straight-Line DepreciationEstimatedRate of Expense ÷ Useful Life= Depreciation   100% ÷ 5=20% Straight-Line Double Rate of Declining-Balance Depreciation  2 = Rate 20%  2=40%

CALCULATING DEPRECIATION USING THE DOUBLE DECLINING-BALANCE METHOD Lesson 21-5, page 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 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 Lesson 21-5, page 564