Double-declining-balance depreciation method

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Double-declining-balance depreciation method (DDB)

An accounting methodology in which the depreciation rate used is double the rate used under the straight-line method. In addition, the rate is applied to the full purchase cost of the asset, whereas under the straight-line method the rate is applied to the cost net of salvage value.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Double-Declining-Balance Depreciation Method

A way of calculating the depreciation of an asset that assumes the asset loses value at double the rate of the straight-line method. One calculates the DDB by depreciating double the straight-line value for the first year, and then depreciating the same percentage for each remaining year of the asset's usable life. DDB is a form of accelerated depreciation.
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References in periodicals archive ?
In double-declining balance depreciation, the constant percentage rate is estimated at 200% of the straight-line rate.
In Table 1, the sum of the future net cash flows for an asset whose expected and actual cash flows mimic the allocations of double-declining-balance depreciation are compared to the carrying values that result from using straight-line depreciation and double-declining balance depreciation. If straight-line depreciation were used, this asset could be classified as impaired in each of the first four years of life - despite the overall recoverability of its acquisition cost.
Double-declining balance depreciation - a method of depreciation in which the first-year depreciation is twice the amount of the straight-line depreciation for the same year