Declining Balance Depreciation Calculator (Double Declining, 150% and Switch to Straight-Line)

How it works

Declining balance rate = factor × (1 ÷ useful life), e.g. 2 × 1/5 = 40% · Depreciation for a year = book value at start of year × rate (× months ÷ 12 in a partial year) · Switch: when (book value − salvage) ÷ remaining years is larger, use that straight-line amount for the rest of the life · book value never goes below salvage

Declining balance is an accelerated method: each year you apply a fixed rate to the asset’s current book value rather than to its original cost, so the expense is largest in the first year and shrinks every year after. The rate is a multiple of the straight-line rate: double declining balance (200%) uses twice 1 ÷ life, and 150% declining balance uses one and a half times. Salvage value is not subtracted before applying the rate, but depreciation stops once book value reaches salvage. On its own, declining balance never quite reaches salvage, so the usual practice is to switch to straight-line over the remaining life in the first year that straight-line gives a larger amount. With the switch on, the schedule ends exactly at salvage. If the asset went into service partway through the year, enter the months in service: the first year gets that share of a full year and an extra partial year is added at the end. Unlike the straight-line depreciation calculator, which spreads the cost evenly, this front-loads the expense, which suits assets that lose value or usefulness quickly, such as vehicles and computers. For US tax returns use MACRS, which builds on the same 200% and 150% methods with fixed conventions.

Worked example

A $10,000 machine with a $1,000 salvage value and a 5-year life, double declining balance: rate = 2 × 1/5 = 40%. Year 1: $10,000 × 40% = $4,000. Year 2: $6,000 × 40% = $2,400. Year 3: $3,600 × 40% = $1,440. Year 4: $2,160 × 40% = $864 (straight-line would be ($2,160 − $1,000) ÷ 2 = $580, so stay on declining balance). Year 5: 40% of $1,296 is $518.40, but only $296 is left above salvage, so depreciation is $296 and book value ends at $1,000. Total depreciation is $9,000.

Sources: CalculatorSoup: Declining balance depreciation (575,000 / 1.5 factor / 5-month first year schedule) · Wikipedia: Depreciation (declining balance example, 40% on $1,000 to $100 salvage)

Frequently asked questions