double-declining-balance depreciation
A method of calculating depreciation expenses at an accelerated rate, in which the depreciation expense is highest during the first period of the depreciation period and progressively lower in each additional period.
The basic formula is:
Current Depreciation Expense = (Cost Purchase - Total Depreciation
from All Other Periods)*2/Depreciation Period
If Cost Purchase - Total Depreciation from All Other Periods - Current
Depreciation Expense< Salvage Value, then
Current Depreciation = Cost Purchase - Total Depreciation from All Other
Periods - Salvage Value
For example, if the depreciation period is 3 months, the purchase price is $1000.00, and the salvage value is 200, the depreciation expense for the first month is $666.67. The equation is:
(1000 - 0)*2/3 = 666.67 (Note that total depreciation from all other periods is 0.)