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The double declining remainder disparagement method is a subprogram more complicated and results in higher derogation agenda in the earlyish geezerhood of an assets life. This allows the connecter to report trim net income and a lower assess liability, a significant advantage for expensive assets. Declining-balance depreciation is found by multiplying an assets net book value (not its depreciable cost) by more or less multiple of the straight-line rate for the asset. The straight-line rate is one divided by the number of eld in the assets mathematical functionful life. Companies typically consumption twice (200%) the straight-line rate, which is called the double-declining-balance rate, but rates of 125%, 150%, or 175% of the straight-line rate are also used. Once the declining-balance depreciation rate is determined, it stays the same for the assets useful life. Calculating Declining- rest period Deprciation 1/use good life in days X 200% = Decli ning Balance Depreciation localise (DBD) DBD Rate X Beginning sort out Book honor = Annual Depreciation Expense Most companies lead not use the double-declining balance method of depreciation on their financial statements. The reason is that it causes the companys net income in the early eld of an assets life to be lower than it would be under the straight-line method.

One reason for exploitation double-declining balance depreciation on the financial statements is to have a agreeable combination of depreciation write down and repairs and maintenance expenditure during the life of the asset. In other words, in the early years of the assets life, when the repairs and main tenance write downs are low, the depreciati! on expense leave behinding be high. In the later years of the assets life, when the repairs and maintenance expenses are high, the depreciation expense lead be low. While this seems logical, the company bequeath end up reporting lower net income in the early years of the assets life (as compared to the use of straight-line depreciation). Most managers will not accept reporting...If you want to get a mount essay, order it on our website: OrderEssay.net

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