DOUBLE DECLINING BALANCE Method of Depreciation

[@AccountingStuff]

Please let me know if you have any topic suggestions :) TIMESTAMPS 00:00 - Intro 00:10 - What is Depreciation? 00:21 - What is the Double Declining Balance Method? 00:34 - Example 01:07 - Step 1: Write Down What You Know 01:35 - Step 2: Build a Depreciation Schedule 01:59 - Step 3: Calculate the Depreciation Expense, Accumulated Depreciation & Book Values 02:51 - How to Calculate Double Declining Depreciation Expense 05:15 - Double Declining Balance Depreciation Graph

[@AZkwn]

Excellent video as always! I just got into an accounting program after changing my major from engineering. But, is this method the same as 'Reducing Balance Method'? Thank you in advance :D

[@AccountingStuff]

@@Malayamakiya Thanks for your requests!

[@jefftankb]

Impairment Assessment/ Testing , please?? Love your work!

[@lennyliqour5134]

McGrew-Hill Connect can pound sand. Figured out the question just from 3 mins of this vid vs 30 mins trying to understand what they put.This guy is where its at

[@michaelgonzalez8469]

James, CONGRATULATIONS!!! You are an excellent teacher, fun and very professional. Thanks for sharing. May GOD bless you !!!

[@AccountingStuff]

Thanks Michael!!

[@566johncena]

Great video!! I love the way you explain concepts using a story!! Thank you☺️

[@AccountingStuff]

Thanks, I'm glad you enjoyed it!

[@christinaahn1887]

So close to finishing! Thank you for another great video!

[@lailabel5443]

I don't know how to say thank you. Thanks to your videos, I got 98% in my first and second exams. I watched them all, and they helped me tremendously. You are one of the best teachers.

[@akshat6007]

2 videos in a week,,, James you are on fire🔥🔥

[@AccountingStuff]

Haha thanks Akshat

[@swetapandya6435]

Hello James, Thank you for all the videos. It has really helped me a lot :) Can you please make a video on how to read and analyse annual reports?

[@AccountingStuff]

No worries Sweta, thanks for your suggestion!

[@swetapandya6435]

Thank you :) :)

[@me_myself_n_ct.97]

Man you're literally my saviour 😢❤

[@AccountingStuff]

Glad you're finding these useful!

[@jaimeherrera3165]

You seem so motivated to make great KZbin video! I bet that burst of motivation come from spending years behind a office desk and just having enough. xD

[@AccountingStuff]

Hey Jaime, I've enjoyed making videos since I was at school. It's just something that I've always done.

[@Shi_Tzu_Lovers]

Hi James, I've been following all of your accounting videos lately and I'm proud to say that I'm learning a lot by the way what will happen to residue value?.

[@samanthabrady1133]

Apologies if this is a bad question to ask but what assets of the company should this method be used for?

[@faridullahalamdar1709]

absolutely amazing video and I follow and watching your videos from #Afghanistan

[@AccountingStuff]

Cheers, all the best!

[@williamjosecunningham2568]

Thanks James!

[@AccountingStuff]

You're very welcome :)

[@karenwhitesidewhite8187]

How do you determine which method to use for depreciation for a company’s assets

[@AccountingStuff]

In Accounting world - there are a few choices so it depends on the specifics of the situation In Tax world - there are guidelines determined by your local tax authority which you need to follow

[@juliomelgar2116]

putting me through accounting class thank you!

[@AccountingStuff]

You got this!

[@rojdaerkol5959]

thank you it was very clear😊😊😊😊

[@AccountingStuff]

Cheers, glad to hear it!

[@aneesta48]

Well explained mate :) Keep up good work 👍

[@AccountingStuff]

Thanks, will do!

[@sennasempre6]

Hi James, is this the same thing or similar to the Reducing Balance method? Or is it completely separate?

[@lauraheuwiese]

Very good! Thank you very much, a very good and understandable explanation!

[@AccountingStuff]

Thanks Mia, glad you enjoyed it

[@natashadavis1026]

Hi James, is residual/salvage value ignored in DDBM or is this simply an example without one? I want to be sure I calculate correctly on my tests. Thank you!

[@oliverbikard7626]

Yes, residual/salvage value is ignored when using the double declining balance method. you start with your asset cost ( not asset cost- residual value like in other methods) PS: I know your comment is two years old so this answer is probably useless to you but I'm answering for other students that were also confused (like I was a few minutes ago)

[@prasannaprithviraj]

Can we depreciate up to 50pc of the equipment cost in the first year of service? I saw an article mentioning this as 250 declining method but haven't found any mentioning of it on the IRS website.

[@imoopuk]

Great video! But you forgot the residual value! :D ;)

[@RT-hz5uv]

Can you do an explanation in the change of depreciation method of an asset in the middle of the asset's life? Such as a double declining depreciation method to sum of the years digit ect.

[@AccountingStuff]

Thanks for your request!

[@zamf]

Hi James, great video again. One question: what happens after 5 years have passed? Do you stop depreciating it and consider it a fixed $194 value after that?

[@AccountingStuff]

In theory you would pick a residual value and stop once you hit it

[@deependcuration]

Hoping you'll save my life for the Thursday exam bro

[@hellboundwhore]

Is double declining the same as diminishing?

[@lazizatabaev]

i have got a question, so when i first googled (before watching this of crs), it gave me a formula: 2*(asset cost - accum. depr.) / useful life but now i see that in what you have given us it is different: 2*(1/useful life)*opening book value P.S. it didn't come out to be the same

[@AccountingStuff]

Hey Laziz, those forumlas are the same. Opening Book Value = Asset Cost - Accumulated Depreciation

[@blast2686]

Inorder to calculate depreciation, you need to ascertain the cost of your asset. I always hit a dead end when I try to calculate the cost of the asset. Adding tax, assembly and installation expenses, deducting trade discounts from purchase value,insurance,custom and duty etc. If there's one expense/income that I really can't get my head around is the 'Income(by products) generated from the trial run of the fixed asset' Companies do this inorder to ensure the effectiveness and efficiency of the asset before the asset can be considered useful to the company. Trial costs are added but income generated from trial cost is subtracted Can u plz elaborate on this?.

[@1231denyz]

From where did he get the straight line depreciation rate?

[@yyrurh]

Hey James, can you cover topics related to revaluation of depreciable and non depreciable assets

[@AccountingStuff]

Thanks for your suggestions!

[@exploringgodscountry]

I assume you take the value at the 7th year as your final depreciation value? Otherwise the graph continues onto infinity, it doesn't ever reach zero in the formula? Silly question as I'm not sure how accountants handle things.

[@gaminghubcenters]

Under double declining balance depreciation method; If the standard depreciation is 25%, will the book value be half every year

[@kostastountas6076]

ty mate

[@WoodT92]

Are you working on new videos. I would like to see you do videos on a more intermediate level of accounting. You showed us perfectly the beginner levert now we’re ready for that next level.

[@AccountingStuff]

Hey Woodly, yes I'm working on new videos as we speak!

[@ymmvee]

“Please” and “Thank you” wouldn’t kill you, you know?

[@WoodT92]

@@ymmvee wtf? You good man?

[@zoeblair2913]

James can I just say...you are bloody amazing! thankyou thankyou thankyou

[@francescotagliavento8081]

a company acquired a machine on 01.01.2013 at cost of 130,000 and spent 2,000 on its installations and 3,000 on trasport. Life of the machienry is 10 years. The company uses the declining balance method of depreciation for machinery at 30% a year. the books of accounts are closed on the 31st december every year. what will be the depreciation charge for the year 2015(year 3)? a)19,845 b)28,350 c)13,500 d)88,695 e) none of above answers is correct Someone could help me?

[@francescotagliavento8081]

a company acquired a machine on 01.01.2013 at cost of 130,000 and spent 2,000 on its installations and 3,000 on trasport. Life of the machienry is 10 years. The company uses the declining balance method of depreciation for machinery at 30% a year. the books of accounts are closed on the 31st december every year. what will be the depreciation charge for the year 2015(year 3)? a)19,845 b)28,350 c)13,500 d)88,695 e) none of above answers is correct Someone could help me?

[@chef-malumcastroes]

Equipment was purchased for R460, 000 with an estimated life of 10 years and a residual value of R19, 000. What is the depreciation expense for the first 5 years using each of the following separate depreciation methods? a. Double-declining balance (15) b. Sum of the years’ digits this one is different please help

[@SushanthBK]

what happens to closing vaue of $194. How do we account it. Would you explain it. Thank you so much Bro

[@coldsteelautodiagnostics7565]

How would taking bonus depreciation in first year, to expense full asset, affect the 3 main financial statements? No one talks about section 149 or bonus depreciation and it's ramifications on Financials

[@ElysonPanolino-g5g]

summary to calculate the book value at year x given the useful life n BV=FC (1- (2/n) )^x

[@sionefalesene4543]

is the working and calculation similar to Diminishing Balance Method? I'm new to the accounting course and really need help on this

[@benworthlong6448]

Hi, I have some questions. What would you say is the best route which would allow me to fast track my way to a high paying career in accounting. Should I consider university or apprenticeships or degree apprenticeships. I'm also not sure as to which accounting degree is the most prestigious. I always thought it was the aca or acca but after watching lot's of accounting videos I'm not sure anymore. Some clarification from a professional like you would be much appreciated. Thanks!

[@AccountingStuff]

Hey Andrej, there are a whole bunch of different career paths that you could take. An effective one that I've seen is to start off in Audit and stay there until you are promoted to a Manager or Senior Manager. After that you can move into industry to work as a Financial Controller or Director. However not everyone is suited to Audit and it's not the only option. In terms of qualifications it really comes down to the country that you live in. They are all slightly different. Personally I have an ACA because I studied in the UK. But the ACCA is also respectable. All the best!

[@benworthlong6448]

@@AccountingStuff Ok, thank you.

[@566johncena]

Accounting Stuff This was very helpful! Thank you!!☺️

[@hemantbhattacharya9676]

It would be highly useful, if you could possibly start a series on Partnership Accounts

[@robyroger1]

I agree

[@AlishaKarim-k4p]

is double declining balance same as reducing balance method? whats the difference?

[@mtc1758]

What if the residual value is zero, should the closing book value be zero as well?

[@nasseryousif1222]

Why is there a residual value for Straight line, but not for the DDB method?

[@rubheanrao5746]

Bro why we should ignore the residual value in double declining method.

[@ninafeizpour7853]

Is the closing book value at the end of useful life = to the salvage/resale value?

[@hassanabbas3666]

Hello James plz make hole question on half year convention of three methods straight line ,200decline balancing , 150 decline balancing switch sides

[@AccountingStuff]

Thanks for your suggestion!

[@abdulqaharesmail5534]

Nice,... Thank you very much for free lessons.

[@AccountingStuff]

No worries Abdul, you're welcome!

[@debit-credittutorial9965]

Hi dear I think, there will not be any amount after five years.

[@draftwork6112]

What is the difference between declining balance and double declining balance...

[@keevinverdianto3536]

How to calculate the depreciation if you get the assets in mid year?

[@jaidev777]

5:53 You're basically the Q of Accounting, from Star Trek The Next Generation.

[@AccountingStuff]

lol

[@stephenperkins3262]

you must do a video explaining ratios and there meaning

[@AccountingStuff]

Did Carole Baskin kill her husband?? Haha.. but seriously thanks for your suggestion :)

[@badger7351]

Does Accounting Stuff have a Patreon????

[@amycanedo3355]

Thanks to your video I figured out what I was doing wrong for my double declining balance! Thank you!!!!🎉

[@Ntcham42]

Hey man, I’m from UK, and I’m desperate for an account/finance research topic for my dissertation. Any ideas?

[@cindyrobson4014]

Hi! First off, thank you for all the great content you make it has seriously helped me solidify my accounting knowledge :) Second, I have a few question regarding my accounting assignment. In my income statement, my business in its 1st year of operations incurred a loss and I am not sure if this translates onto the balance sheet as "retained profits" section of equity? And if so would I have to deduct this "loss" from my contributed capital? Also, in my business scenario for the 1st year, a transaction states "electricity bill estimated at $8,800. Bill not received" would I record this on my income statement and balance sheet (for that 1st year) even though the business has not paid for it yet or would I only record it when the bill has been received and paid for? (ps. the business receives the actual bill in the 3rd year) Thank you!!

[@AccountingStuff]

Hey Cindy, a loss in your first year would translate to negative retained earnings in the equity section of your Balance Sheet. Capital Contributions are a separate item in this section and are considered separately. I explain this in detail in this video → kzbin.info/www/bejne/fKOYoHt7jteHaKM

[@AccountingStuff]

For your second question it depend on whether you are Cash or Accrual Accounting. Which are you using?

[@cindyrobson4014]

Accounting Stuff thanks for replying, I’m using accrual :)

[@MuhammadHussain-yn7wi]

How relevant are the cheat sheets to Accounting Studies(AAT) in the UK please?

[@AccountingStuff]

My Cheat Sheets cover basic accounting concepts which are universal

[@bestesevinc276]

This video is not easy to understand... :( Is the double declining method is the same as diminishing value method ? If so... isnt the formula cost x rate and if it is partly purchased during the year the remaining months divided by 12 multiplied by the cost x rate ?

[@AccountingStuff]

Hey Beste, the Double-Declining Balance Method is similar to the Diminishing value method but it's not exactly the same. You are correct regarding purchases made during the year.

[@bestesevinc276]

Thank you that is relieving! I just passed my assessment onto the server which was about depreciation and was confused if I did it wrong. Trying to put pieces together from little bit of information there and little bit from there. Your videos are amazing and very helpful. Thank you

[@Ri-ul7nb]

Congrats! Another amazing video. Was wondering, if you have to calculate depreciation via this method for 3 months for instance, then how would you do that? I’ve been trying to do this, have an exam tomorrow, and it’s not working out.

[@shobhitmundhada3315]

What happens when you have residual value, and how should it be calculated?

[@shobhitmundhada3315]

residual value for me is: $60,000

[@ninafeizpour7853]

How are you figuring the useful life?

[@alfredcobbinah9743]

Please I want a video of impairment

[@messididit]

Yeah he is back!

[@arezootavakoli5967]

Please made video for bonds payable

[@lazerchickenman1013]

You’re a life saver!!! my homework is due in 2 hours😂

[@habtamusisay9143]

I like you You are intelligence

[@portiafielies4976]

Hallo James.. OMG YOU ARE SO AWESOME.. THANK YOU I am so thankful.. U jst made my day.. Love the tutorial

[@AccountingStuff]

No worries Portia, have a good one!

[@gretabauer4466]

Could you do a video explaining goodwill and how to journal it?

[@AccountingStuff]

Thanks for your request!

[@boxanator]

Can you please do a video on Cost volume profit, Absorption costing vs ABC Costing or Strategy map and balanced score card. Would be much appreciated as I have an exam in a month time and your videos really help make things clear and precise. thankyou from a university student studying accounting financial management

[@AccountingStuff]

Thanks for your suggestions! Good luck with your revision :)

[@GGgaming-sq6zr]

could you tell me how you got that useful life of 5 years'😊

[@jefftankb]

As usual, great video and easy to understand explanations! Great work! How about a video on "Impairment Assessment" or "Impairment Testing" ?

[@AnkushSharma-zv5hv]

thank for u video but why u did not used residual value ?

[@AccountingStuff]

I probably should have included it in this. With a residual value it's the same process but you would stop when you hit it

[@usmanashraf9079]

thanku very much man. you really help me in my exam preparation and got a new subscriber. keep it up....

[@AccountingStuff]

No worries Usman, best of luck in your exams!

[@hemantbhattacharya9676]

Unrelated but please explain interest on drawings

[@AccountingStuff]

Thanks for your suggestion!

[@bilalkhankhan9709]

Please upload lecture about accounts receivables

[@AccountingStuff]

Thanks for your suggestion!

[@ilmailmy1060]

Nice one James And make a video up on revaluation method of depreciation 🙏🏻🙏🏻🙏🏻

[@AccountingStuff]

Thanks for your suggestion :)

[@karanveerkahlon7548]

love your videos, really explain it nicely

[@khotbimohcine59]

Im following you from morocco 🇲🇦 just to learn accounting in English cuz im studying french accounting it the same depreciation in french is les amortization

[@AccountingStuff]

Learning accounting in 2 different languages must be hard work!

[@khotbimohcine59]

Accounting Stuff it’s my passion

[@mixrtraining-accountingfor8885]

You're such an inspiration Accounting Stuff, I now have an accounting tutorial because I applied what I have learned from you but I am focusing more in excel. Your way of teaching is superb. I want to grow in youtube like you. AND OF COURSE I need your confidence

[@AccountingStuff]

Great to hear that you're helping teach others! All the best

[@mixrtraining-accountingfor8885]

Accounting Stuff wahhhhh i am very happy you replied to me... for some reason i am a teacher but you're my teacher too 🙂 can i screenshot this and show to my students? I am like a kid☺️ 💗

[@samuelgoodluck8052]

Nice one James... Thanks for the video again

[@AccountingStuff]

No problem!

[@wengyennie]

Love your videos! Could you do a video on margins? Mainly contribution margin and operating margin and how financial analysts uses these metrics to make financial decisions?

[@AccountingStuff]

Thanks for your suggestions!

[@lorelynsharaimbesario1737]

thank you so much for this video. It was really helpful!!!

[@AccountingStuff]

Cheers Lorelyn :)

[@jrramos108]

Really appreciate all your videos!

[@erwinsmith7919]

Mate! This was Excellent! so simple and easy to comprehend

[@AccountingStuff]

Glad it helped!

[@rjeption]

confusing stuff

[@abdirisakabdimahadahmed1536]

Thanks teacher

[@AccountingStuff]

You are welcome :)

[@bakrrii6534]

James, please do bad and doubtful debtors :(

[@AccountingStuff]

Cheers for your suggestion!

[@thomasnithin21]

Hey James, can you do a video on debt schedule?

[@AccountingStuff]

Thanks for your suggestion :)

[@EddieMasseyIII]

Very clear! Thanks!

[@AccountingStuff]

Nice, glad to hear it :)

[@kimberleymataure5356]

thank you

[@HOMEFOODMANIACS]

Nice one james

[@AccountingStuff]

Thanks Munesh!

[@thomaslandrove1566]

Merci Beaucoup

[@AccountingStuff]

You're very welcome :)

[@baristalife-kk]

This helped me out a ton, thank you so much!

[@AccountingStuff]

Nice one! Glad to hear it :)

[@andrewandal8000]

First comment again haha still hoping for a followback in twitter🤞

[@AccountingStuff]

Thanks Condura! I have a twitter account but I haven't used it in years.

[@laurachester7296]

Mannn I needed this about a week ago😩 your videos are the best explanations out there. Please keep making more I’m taking accounting 2 this summer

[@AccountingStuff]

Oh no, I was too late!