declining balance method of depreciation multiplying the book value by a constant depreciation rate...
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CALCULATING DEPRECIATION USING THE DOUBLE DECLINING-BALANCE METHOD Lesson 21-5, page Determine the ending book value. 1. Enter the double declining-balance rate. 2.Determine the annual depreciation expense. 4.Transfer the book value to the following year. 4 1TRANSCRIPT
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Declining Balance Method of DepreciationMultiplying the Book Value by a constant depreciation rate at the end of each fiscal period.
A plant asset is never depreciated below its estimated salvage value.
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CALCULATING DEPRECIATION USING THE DOUBLE DECLINING-BALANCE METHOD
Lesson 21-5, page 562Lesson 21-5, page 562
Estimated Years of Straight-LineDepreciation Estimated Rate of
Expense ÷ Useful Life = Depreciation
100% ÷ 5 = 20%
Straight-Line Double Rate of Declining-Balance
Depreciation 2 = Rate20% 2 = 40%
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CALCULATING DEPRECIATION USING THE DOUBLE DECLINING-BALANCE METHOD
Lesson 21-5, page 562Lesson 21-5, page 562
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3. Determine the ending book value.
1. Enter the double declining-balance rate.2. Determine the annual depreciation expense.
4. Transfer the book value to the following year.
4
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CALCULATING THE LAST YEAR’S DEPRECIATION EXPENSE
Lesson 21-5, page 563Lesson 21-5, page 563
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3. Verify the ending book value.
1. Transfer the book value.2. Determine the last year’s depreciation.
1
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COMPARISON OF THE TWO METHODS OF
DEPRECIATION