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What Is Double Declining Balance Method?

Sophia Al-Mansoor • • 6 min read
What Is Double Declining Balance Method?

The double declining balance (DDB) method is an accelerated depreciation

accelerated depreciation
Bonus depreciation is a tax incentive that allows a business to immediately deduct a large percentage of the purchase price of eligible assets, such as machinery, rather than write them off over the "useful life" of that asset. Bonus depreciation is also known as the additional first year depreciation deduction.
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calculation used in business accounting. ... The DDB method records larger depreciation expenses during the earlier years of an asset's useful life, and smaller ones in later years.

How do you calculate double declining balance?

Double declining balance is calculated using this formula:
  1. 2 x basic depreciation rate x book value.
  2. Your basic depreciation rate is the rate at which an asset depreciates using the straight line method.
  3. Cost of the asset is what you paid for an asset. ...
  4. Once you've done this, you'll have your basic yearly write-off.

How do you do the double decline method?

First, Divide “100%” by the number of years in the asset's useful life, this is your straight-line depreciation rate. Then, multiply that number by 2 and that is your Double-Declining Depreciation Rate. In this method, depreciation continues until the asset value declines to its salvage value.

Sophia Al-Mansoor
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Sophia Al-Mansoor

Sophia analyzes international trade, startup ecosystems, retail transformation, and supply chain logistics for modern digital publications.