Question

Explain Straight Line and Double Declining Balance Depreciation.

Answer 1

The straight line method is the simplest method, as you reduce the value of an asset by the same amount each year. The double-declining method front loads the depreciation, so you expense more in the earlier years than in the later years of an asset’s useful life.The double declining balance depreciation method is an accelerated depreciation method that counts as an expense more rapidly ,when compared to straight-line depreciation that uses the same amount of depreciation each year over an asset's useful life.

Formulas

Straight line =Asset cost-Residual value / Useful life of asset .

Double declining method =2 * Asset cost- Acumulated depreciation / Useful life of asset