Monday, September 10, 2007

Double Declining Depreciation Method

The double declining balance method is an accelerated method of depreciation. The first thing that you have to fiqure is the yearly percentage of depreciation. For example, the machine you just purchased has a useful life of 5 years. That amounts to 20% per year for depreciation on a regular basis, but we are doubling that each year under the double declining method. We depreciate until we reach the residual value by multiplying the carrying value by the double percentage. The chart below best illustrates the process

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