Depreciation Schedule Double Declining Balance

The double declining balance depreciation method shifts a company s tax liability to later years when the bulk of the depreciation has been written off.

Depreciation schedule double declining balance. It is frequently used to depreciate fixed assets more heavily in the early years which allows the company to defer income taxes to later years. This method accelerates straight line method by doubling the straight line rate per year. Using this method the book value at the beginning of each period is multiplied by a fixed depreciation rate which is 200 of the straight line depreciation rate or a factor of 2. The double declining balance ddb method is a system designed to accelerate the cost recovery of an asset s depreciable base.

Double declining balance method is a form of an accelerated depreciation method in which the asset value is depreciated at twice the rate it is done in the straight line method. Use this calculator for example for depreciation rates entered as 1 5 for 150 1 75 for 175 2 for 200 3 for 300 etc. The ddb method addresses that notion. The double declining balance depreciation method is a form of accelerated depreciation that doubles the regular depreciation approach.

The double declining balance method is an accelerated depreciation method. To calculate depreciation based on a different factor use our declining balance calculator. The double declining balance method of depreciation also known as the 200 declining balance method of depreciation is a form of accelerated depreciation. This means that compared to the straight line method the depreciation expense will be faster in the early years of the asset s life but slower in the later years.

After all most assets depreciate faster in their early years of service and slower in their later years of service. This declining balance depreciation schedule calculator can be used to calculate the depreciation expense for an asset for up to a maximum term of 3 650 periods. When the depreciation rate for the declining balance method is set as a. The company will have less depreciation expense resulting in a higher net income and higher taxes paid.

A depreciation factor of 200 of straight line depreciation or 2 is most commonly called the double declining balance method. Since the depreciation is done at a faster rate twice to be precise of the straight line method it is called accelerated depreciation. Depreciation rates used in the declining balance method could be 150 200 double or 250 of the straight line rate.