Sample Essay
The rate of depreciation for double declining method is estimated by doubling the rate of straight line method. The rate of depreciation for straight line method is calculated by using the following rate (Bragg, 2002).
Rate = Depreciation expense / depreciable cost
Rate = 30,000 / 120,000
Rate = 25%
The rate for double declining method will be 50% and the formula for double declining balance is given below.
Depreciation expense = Book Value X rate
Depreciation expense 2007 = 125,000 X 50% = $62,500
Depreciation expense 2008 = 62,500 X 50% = $31,250
Depreciation expense 2009 = 31,250 X 50% = $15,625
Depreciation expense 2010 = 15,625 X 50% = $7,812.5
| Year | Cost | Depreciation Expense | Accumulated Depreciation | Book Value |
| 2007 | 125,000 | 62,500 | 62,500 | 62,500 |
| 2008 | 125,000 | 31,250 | 93,750 | 31,250 |
| 2009 | 125,000 | 15,625 | 109,375 | 15625 |
| 2010 | 125,000 | 7,812.5 | 117,187.5 | 7,812.5 |
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