Accounting and Finance for Lawyers
Double Declining Method
The double declining method depreciates by taking the percent of the useful life the year is, doubling it, and multiplying it by the opening balance.
- Note that unlike the others, scrap value does not change this depreciation every year. It just cannot depreciate it below such value.
Example
| Year | Historical Cost | Opening Balance | Depreciation Expense (20%) | Accumulated Depreciation | Book Value |
|---|---|---|---|---|---|
| 1 | $100,000 | $100,000 | $20,000 | $20,000 | $80,000 |
| 2 | $100,000 | $80,000 | $16,000 | $36,000 | $64,000 |
| 3 | $100,000 | $64,000 | $12,800 | $48,800 | $51,200 |
| 4 | $100,000 | $51,200 | $10,240 | $59,040 | $40,960 |
| 5 | $100,000 | $40,960 | $8,192 | $67,232 | $32,768 |
| 6 | $100,000 | $32,768 | $6,554 | $73,786 | $26,214 |
| 7 | $100,000 | $26,214 | $5,243 | $79,028 | $20,972 |
| 8 | $100,000 | $20,972 | $972 | $80,000 | $20,000 |
| 9 | $100,000 | $20,000 | $0 | $80,000 | $20,000 |
| 10 | $100,000 | $20,000 | $0 | $80,000 | $20,000 |