CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 18-5LESSON 18-5

Declining-Balance Method of Depreciation

2

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-5

CALCULATING DEPRECIATION USING THE CALCULATING DEPRECIATION USING THE DOUBLE DECLINING-BALANCE METHODDOUBLE DECLINING-BALANCE METHOD

11

22 33

page 551

44

1. Calculate the double declining-balance rate.

2. Determine the annual depreciation expense.

3. Determine the ending book value.

4. Transfer the ending book value to the beginning book value for the following year.

3

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-5

CALCULATING THE LAST YEAR’S CALCULATING THE LAST YEAR’S DEPRECIATION EXPENSEDEPRECIATION EXPENSE

22 33

page 552

1. Transfer the ending book value from Year 4 to the beginning book value of Year 5.

2. Subtract the salvage value from the beginning book value to determine the depreciation expense for the last year.

3. Verify that the ending book value is equal to the salvage value.

11

4

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-5

COMPARISON OF TWO METHODS OF COMPARISON OF TWO METHODS OF DEPRECIATIONDEPRECIATION page 553

5

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-5

TERM REVIEWTERM REVIEW

declining-balance method of depreciation

page 554