Straight Line and Declining Balance Method (Financial Accounting Tutorial #58)

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The straight line method and declining balance methods are covered in this tutorial for determining depreciation expense. You'll need to find out the capitalized cost, the salvage value and the useful life in order to calculate the expense amount for each year. If the salvage value is not given you can consider it being immaterial or worth $0 at the end of its useful life.
The straight line method is a simpler method to determine depreciation expense and it usually is used in a scenario where the asset is being used consistently over the years. If an asset is used more at the beginning and loses value early on, then the declining balance or double declining balance OR triple declining balance method will apply.
**REMEMBER NOT TO INCLUDE SALVAGE VALUE FOR DB METHOD! Leave any questions below; I want ALL of your questions.
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[@bondonvancouver2813]

i have a different method in my book its 3 steps 1- straight line rate = 100%/useful life 2- double decline balance rate= 2*straight line rate 3-depreciation expense= double decline balance * beginning period book value is it the same ?

[@razaafridi8545]

Hello, I want to ask what is the criteria to choose the depreciation method? or we can choose any in which we can safe more money?

[@MrHasujan]

I was trying to prepare for my next lesson, ahead of the teacher and found this very helpful. You explained it very well; I found it easy and simple to follow. The voice is slightly robotic :-), but the visual, methodic explanations are excellent. Thank you very much.

[@masoncagle5983]

Thank you so much for this video! You teach me more on these short videos than my Professor does.

[@rzhh]

first of all thank toy very much for explaining both methods, i actually have question about the declining balance methods. Do we always have to use 100% to divide it by the number of useful life or does it change from question to question. Thank you very much

[@Cusack187]

Fantastic tutorial. I was before told to use the formula 1-(nroot of residual value/cost), and couldn't get it to work, but your method gave me the right answer and cleared a big issue up in minutes. Thanks very much!

[@josephswanson2716]

Purchase a machine for R400 000(excluding Vat 14%) Additional costs transport and installation R20000.Depreciation calculated at 20% per annum. Using straightline and diminishing method for the first 6 months,what will the depreciation be? ANSWER :R47600 for both,Am i correct?

[@hossammagdy925]

Thanks a lot! Your videos are so underrated!

[@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?

[@conly3560]

Thank you for your lessons, it sure helped me a lot.

[@zarrarnavid3242]

Premises = 60,000 Motor Vehicle = 20,000 3. Depreciation is to be charged on the premises at the rate of 2% per annum on cost using the straight line method and on the motor vehicle 20% per annum using the Reducing balance method. (Can somone help me with this)

[@joshuanete8586]

Thanks for the video. I've been using the double declining balance (DDB) method similar to how you've explained but I've also recently read that 'in the year in which the straight line deprecation expense exceeds the declining balance value, you switch to straight line method for the remainder of the asset's life'. In your example, could you have also applied this?

[@AllAboutJailbreak]

what happens if the Equipment, for instance, is bought at the beginning of the 7th month? slavage/residual value: 1000 Useful Life: 5 yrs Using straight-line depreciation, would you then say; 1. (1000/5)* (5/12) 2. 1000/5 3 1000/5 4. 1000/5 5. 1000/5 6. (1000/5)* (7/12) That confuses me. Thanks for your videos, since they help a lot !!

[@AllAboutJailbreak]

***** thank you so much, you're a huge help!

[@racequad9]

Is the Declining Balance Method an accelerated depreciation method?

[@thankyouknots]

Thanks so much for this! you've helped me so much for my Financial accounting class. I will surely be back when I take managerial

[@ezoblaze]

Sir, can you explain to me how to do sum of the year's digit (SYD)

[@FlashOfFireflies]

is there any difference between salvage value and residual value? love your explanations, clear and concise

[@MSOLOHH]

no difference. they re the same.

[@_Silverz]

Was thinking the same thing

[@lalaisgongon]

Can you do one on Share Based Payments!

[@urduabdo609]

Thank you so much it helped me in my university exam

[@reprimand33]

no its units of activity, 06:10

[@reneequirk1903]

Your tutorials are so helpful! Thanks!

[@aniseizwani8990]

I don’t get it. How did you calculate the NRV?

[@managementgroup7232]

NRV is calculated by subtracting the cost by the depreciated value

[@alexabacoanu3869]

Very clear! Many thanks!

[@saniamakhdoom6699]

its awesome...... i love it ..its comprehensive and convenient

[@leoadian1229]

when there isnt ANY salvage value??

[@deebest3106]

Very good explanation

[@rob8482]

Good job pirate.

[@mfcruz4385]

Thank you so much!

[@sharonkilzer4021]

how come these people can't just get to the methods and show the methods without all the uneccessary comments.

[@sharonkilzer4021]

stating the formula and showing the formula was all i wanted. quick and to the point was what i was looking for. didn't mean to offend.

[@sharonkilzer4021]

hun, if you think that's an insult. stick around. i can show you what an insult truly is.

[@sharonkilzer4021]

dude. grow up. good grief.