Declining Balance Method

(redirected from Declining-Balance Method)

Declining Balance Method

A way of calculating the depreciation of an asset whereby one subtracts a certain percentage of its current value each year. For example, suppose an asset costing $100,000 depreciates 10% each year. After the first year, it depreciates to $90,000. In the second year, one deducts 10% from the $90,000, rather than the original $100,000. Thus, the depreciated value after the second year is $81,000. This is a common means of calculating depreciation.
References in periodicals archive ?
While the company and its subsidiaries traditionally used the declining-balance method for calculating depreciation of property, plant, and equipment, the company has resolved for, starting from the fiscal year ending March 31, 2017, the company and its subsidiaries adopt the straight-line method of depreciation as a general rule.
Another type of accelerated method is called the declining-balance method.
This allocation for partial periods can also be performed for the sum-of-years-digits and declining-balance methods.
This category is depreciated over a 1S-year recovery period on the 150-percent declining-balance method.
Turnbull notes that in two years, when the law conforms the recovery periods used for AMT purposes with those used for regular tax purposes, the decision whether to elect the 150% declining-balance method for new assets will be important because it will mean having to deal with only one depreciation schedule.
Taxpayers should also be aware that this is a straight-line method, unlike other modified accelerated cost recovery system 15-year recovery property, which is generally eligible for the 150% declining-balance method.
For regular AMT purposes, depreciation will be calculated using the 120% declining-balance method over regular tax useful life.
Depreciation calculation uses the declining-balance method.
Second, the method used to calculate reclassified assets was changed from straightline depreciation to the declining-balance method.
Under the current modified accelerated cost recovery system (MACRS), assets in the three-year, five-year, seven-year and 10-year classes are depreciated using the 200% declining-balance method.
13) For these assets, the 150% declining-balance method allowable for AMT is allowed for ACE depreciation.
00% declining-balance method the 150% declining-balance method, or the straight-line method generally depending on the class life of the property.