Double Declining Depreciation Calculator

Formula

To calculate the Double Declining Depreciation (D):

\[ D = 2 \times \left( \frac{AC - RV}{L} \right) \]

Where:

$ D $ is the Double Declining Depreciation
$ AC $ is the Asset Cost
$ RV $ is the Residual Value
$ L $ is the Useful Life of the Asset

What is Double Declining Depreciation?

Double declining depreciation is a method used to calculate the depreciation expense of an asset, where the asset is assumed to lose value at a faster rate in the earlier years of its useful life. This method allows businesses to allocate higher depreciation expenses upfront, reflecting the higher wear and tear on the asset during its early years. It helps accurately account for the declining value of assets over time, allowing businesses to measure their true costs and make informed decisions regarding asset replacement or disposal.

Example Calculation

Let's assume the following values:

Asset Cost $ AC $ = $10,000
Residual Value $ RV $ = $1,000
Useful Life $ L $ = 5 years

Step 1: Use the double declining depreciation formula:

\[ D = 2 \times \left( \frac{10,000 - 1,000}{5} \right) = 2 \times \left( \frac{9,000}{5} \right) = 2 \times 1,800 = 3,600 \text{ dollars/year} \]

The Double Declining Depreciation is $3,600 per year.