Double-declining-balance depreciation method

Definition

Double-declining-balance depreciation method is an accelerated depreciation technique that allocates a higher expense in the earlier years of an asset's life. It doubles the rate of straight-line depreciation, applying it to the declining book value each year.

5 Must Know Facts For Your Next Test

1. The double-declining-balance method accelerates depreciation compared to other methods.
2. This method does not subtract residual value when calculating annual depreciation.
3. It is commonly used for assets that lose value quickly early in their useful lives.
4. The formula involves doubling the straight-line rate and applying it to the current book value.
5. Depreciation expense decreases over time as the asset's book value drops.

Related terms

Straight-Line Depreciation:

A method that spreads an asset’s cost evenly over its useful life.

Book Value:

The value of an asset after accounting for depreciation and amortization.

Residual Value:

The estimated amount that an entity expects to obtain from disposal of an asset at the end of its useful life.