Declining-balance depreciation is implant by multiplying an assets net book value (not its depreciable cost) by nearly multiple of the straight-line rate for the asset. The straight-line rate is one divided by the number of eld in the assets mathematical functionful life. Companies typically use twice (200%) the straight-line rate, which is called the double-declining-balance rate, but rates of 125%, 150%, or 175% of the straight-line rate are also used. Once the declining-balance depreciation rate is determined, it stays the same for the assets useful life.
Calculating Declining- quietus Deprciation
1/use good life in years X 200% = Declining Balance Depreciation Rate (DBD)
DBD Rate X Beginning sort out Book Value = Annual Depreciation Expense
Most companies lead not use the double-declining balance method of depreciation on their financial statements. The reason is that it causes the companys net income in the early years of an assets life to be lower than it would be under the straight-line method.
One reason for exploitation double-declining balance depreciation on the financial statements is to have a consistent combination of depreciation write down and repairs and maintenance expenditure during the life of the asset. In other words, in the early years of the assets life, when the repairs and maintenance expenses are low, the depreciation expense leave behinding be high. In the later years of the assets life, when the repairs and maintenance expenses are high, the depreciation expense will be low. While this seems logical, the company will end up reporting lower net income in the early years of the assets life (as compared to the use of straight-line depreciation). Most managers will not accept reporting...If you want to get a full essay, order it on our website: Ordercustompaper.com
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