Page 421 - Accounting Principles (A Business Perspective)

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Depreciation
Expense Dr.; Total
Accumulated Accumulated
End of Year Depreciation Cr. Depreciation Book Value
$54,000
1. (20% of $54,000) $10,800 $10,800 43,200
2. (20% of $43,200) 8,640 19,440 34,560
3. (20% of $34,560) 6,912 26,352 27,648
4. (20% of $27,648) 5,530 31,882 22,118
5. (20% of $22,118) 4,424 36,306 17,694
6. (20% of $17,694) 3,539 39,845 14,155
7. (20% of $14,155) 2,831 42,676 11,324
8. (20% of $11,324) 2,265 44,941 9,059
9. (20% of $9,059) 1,812 46,753 7,247
10. (20% of $7,247) 1,449* 48,202 5,798
* This amount could be $3,247 to reduce the book value to the estimated salvage value of
$4,000. Then, accumulated depreciation would be $50,000.
Exhibit 84: Double-declining-balance (DDB) depreciation schedule
Double-declining-balance method To apply the double-declining-balance (DDB) method of
computing periodic depreciation charges you begin by calculating the straight-line depreciation rate. To do this,
divide 100 per cent by the number of years of useful life of the asset. Then, multiply this rate by 2. Next, apply the
resulting double-declining rate to the declining book value of the asset. Ignore salvage value in making the
calculations. At the point where book value is equal to the salvage value, no more depreciation is taken. The formula
for DDB depreciation is:
Deprecation per period=2×Straight−line rate×Asset cost – Accumulateddepreciation

Accounting Principles: A Business Perspective 422 A Global Text