The Double Declining Balance method provides an accelerated depreciation schedule.
Calculation of this method is quite interesting. For example You are buying something for $5000, it has life of 5 years and after that time it would be worth of $500.
If you calculate this in Straight Line Depreciation method then the asset’s annual depreciation will be 20% of the asset’s cost – salvage, i.e. ($5000-$500)*20%=$900.
But with Double Declining Balance Depreciation method first year’s would be $5000*(20%)*2(for double)=$2000.
The following table will help you understand how Double Declining Balance Depreciation Schedule is calculated.
Double Declining Balance Depreciation Schedule
|Fifth Year||Rest of the value||$148.00
Calculating Double Declining Balance Depreciation Schedule in Excel is much easier(Excel is built for that of course!) than you think. You will need 5 Parameters(4 mandatory and 1 optional).
- Cost: Cost of the asset.
- Salvage: Asset’s value after its life.
- Life: Lifetime of asset.
- Period:(optional) The period you want the value.
- Factor: How the depreciation is to be calculated. You can set it 1.5 or anything else, if left blank 2 is default value.
Now Make a Excel sheet with this fields and enter =DDB(cost, salvage, life, period, [factor]) in your desire field and you have your result.