1. Declining Balance Accelerated Method of Depreciation

2. Why Double Decline? Many plant assets depreciate more in the early years Example: Ipod, Truck Charging more depreciation in the early years is more accurate than charging it in the later years

3. Double Declining Balance Formula- Explanation Multiplying the book value by a constant depreciation rate at the end of each fiscal period is called declining balance of depreciation. The declining balance depreciation is multiply by two and this gives us the double declining rate Store Owner pays 10 cents per bag Cost of Merchandise Selling price

4. How does the formula look like? Estimated depreciation Expense Straight line rate of depreciation Years of estimated useful life Straight line rate of depreciation 2 Double Declining balance rate / = = x

5. Plant Asset: truckOrig. Cost: $25,000 Est. Salv. Value:$2,500 Est. Useful Life: 5 yrs. Years of estimated useful life Straight line rate of depreciation 2 Double Declining balance rate / = = x Estimated depreciation Expense Straight line rate of depreciation 100% 520% 2 40% / x = =

6. Calculating Depreciation Expense Plant Asset: truckOrig. Cost: $25,000 Est. Salv. Value:$2,500 Est. Useful Life: 5 yrs. YearBeginning Book Value Declining Balance Rate Annual Depreciation Ending Book Value 1$25,00040%$10,000$15,000 2 40%$6,000$9,000 3 40%$3,600$5,400 4 40%$2,160$3,240 5 ---------$740$2,500