Double Declining Balance Depreciation Calculator

Double Declining Balance Depreciation: worked example

Purchase cost	$50,000
Salvage value	$5,000
Useful life	5.0 years
Year to calculate	2
Depreciation in that year	$12,000
Book value at year end	$18,000
Total depreciation so far	$32,000

Double Declining Balance Depreciation: formula

Yearly depreciation = book value at start of year × (2 ÷ useful life), never taking book value below salvage value

IRS Publication 946: How To Depreciate Property · OpenStax: book depreciation methods

Common error: Applying the rate to the original cost each year. The rate acts on the shrinking book value, and using the cost repeats year one's charge and overshoots the asset's whole value.

Purchase cost, salvage value and useful life describe the asset, and the year to calculate is which year's depreciation you want. The method applies double the straight-line rate, two divided by the life, to the book value at the start of each year, and it stops when book value reaches salvage. Use the useful life your accountant assigns to the asset class.

Double Declining Balance Depreciation: changing Purchase cost

Each purchase-cost case begins a new declining-balance schedule. The charge is based on opening book value for the selected year, so it depends on charges already taken. Salvage imposes a lower bound on ending book value rather than an additional amount depreciated every year.
Purchase cost	Depreciation in that year	Book value at year end	Total depreciation so far
$40,000	$9,600	$14,400	$25,600
$45,000	$10,800	$16,200	$28,800
$50,000 (example)	$12,000	$18,000	$32,000
$55,000	$13,200	$19,800	$35,200
$60,000	$14,400	$21,600	$38,400

Double Declining Balance Depreciation: compare input ranges

Useful life sets the declining rate; the selected year determines how many earlier charges have reduced the base. Changing salvage may leave an early charge unchanged until its floor becomes binding. Interpret a flat comparison in relation to that boundary, not as a rule that salvage never matters.
Input	Tested from	To	Depreciation in that year: low input	Depreciation in that year: high input	Swing
Year to calculate	1	3	$20,000	$7,200	$12,800 (107%)
Purchase cost	$45,000	$55,000	$10,800	$13,200	$2,400 (20%)
Useful life	4.0 years	6.0 years	$12,500	$11,111	$1,389 (12%)
Salvage value	$4,500	$5,500	$12,000	$12,000	$0.00

Double Declining Balance Depreciation: individual input comparisons

Recompute the schedule from acquisition whenever a starting assumption changes. Subtracting the revised annual charge from an old, unrevised closing balance mixes two schedules. The annual charge, cumulative depreciation and remaining book value should reconcile within the same set of asset assumptions.
Input	Value	Depreciation in that year	Book value at year end	Total depreciation so far
Purchase cost	$40,000	$9,600	$14,400	$25,600
	$45,000	$10,800	$16,200	$28,800
	$50,000	$12,000	$18,000	$32,000
	$55,000	$13,200	$19,800	$35,200
	$60,000	$14,400	$21,600	$38,400
Salvage value	$4,000	$12,000	$18,000	$32,000
	$4,500	$12,000	$18,000	$32,000
	$5,000	$12,000	$18,000	$32,000
	$5,500	$12,000	$18,000	$32,000
	$6,000	$12,000	$18,000	$32,000
Useful life	3.0 years	$11,111	$5,556	$44,444
	4.0 years	$12,500	$12,500	$37,500
	5.0 years	$12,000	$18,000	$32,000
	6.0 years	$11,111	$22,222	$27,778
	7.0 years	$10,204	$25,510	$24,490
Year to calculate	0	$20,000	$30,000	$20,000
	1	$20,000	$30,000	$20,000
	2	$12,000	$18,000	$32,000
	3	$7,200	$10,800	$39,200
	4	$4,320	$6,480	$43,520

Double Declining Balance Depreciation: combined input changes

These intersections combine changes before rebuilding the yearly sequence. A common percentage rate applied to two different opening book values produces different dollar charges. Inspect the closing balance as well as the selected year's expense, especially when the salvage floor prevents another full declining-rate deduction.
Purchase cost / Useful life	3.0 years	5.0 years	7.0 years
$40,000	$8,333	$9,600	$8,163
$45,000	$10,000	$10,800	$9,184
$50,000	$11,111	$12,000	$10,204
$55,000	$12,222	$13,200	$11,224
$60,000	$13,333	$14,400	$12,245

Double Declining Balance Depreciation: which assumptions move the result?

Chart quantity	Displayed settings
Year to calculate	0 → 4
Depreciation in that year	$20,000 → $4,320
Purchase cost	$50,000
Salvage value	$5,000
Useful life	5.0 years

Chart quantity	Displayed settings
Purchase cost	$40,000 → $60,000
Depreciation in that year	$9,600 → $14,400
Salvage value	$5,000
Useful life	5.0 years
Year to calculate	2

Double Declining Balance Depreciation: values and definitions

Purchase amount, estimated salvage and useful life describe an accounting scenario. The selected year locates an entry within that scenario. This arithmetic worksheet does not select a tax depreciation class, establish a permissible recovery period or provide a rule for a midyear change in an accounting estimate.
Quantity and definition	Value used
Purchase cost	$50,000
Salvage value — The floor the book value is not allowed to fall below.	$5,000
Useful life — How many years the asset is expected to be in service.	5.0 years
Year to calculate — Which year of the asset's life to show, counted from 1.	2
Depreciation in that year	$12,000
Book value at year end	$18,000
Total depreciation so far	$32,000

Double Declining Balance Depreciation: half and double Year to calculate

Scaling acquisition cost while retaining the same salvage amount also changes the relation between cost and the lower book-value bound. A proportional annual expense is therefore conditional on where the schedule sits relative to that floor. Reconcile the selected-year charge with cumulative depreciation before comparing assets.
Year to calculate	Depreciation in that year
1	$20,000
2	$12,000
4	$4,320

This version applies the declining-balance rate and salvage floor; it does not automatically switch to straight-line. It may therefore leave book value above salvage at the end of the entered life. Book accounting, tax MACRS, bonus depreciation and section 179 are different calculations.

A book-depreciation result does not establish a tax deduction or predict resale value.

An independently published declining-balance example

OpenStax illustrates a $10,000 machine with a five-year useful life and $1,000 residual estimate. The declining percentage is twice one fifth, or 40%. Applied to acquisition cost, that gives $4,000 depreciation in the first full year; the next opening carrying amount is $6,000, producing $2,400 expense in year two.

Residual value constrains the lower carrying amount rather than reducing the amount to which the initial percentage is applied. This differs from a straight-line allocation over an equal life. For bookkeeping, distinguish the expense recognized during a year from accumulated depreciation through that year.

Neither is the cash paid to acquire the machine. Depreciation allocates capitalized cost; it does not appraise what a buyer would pay for the equipment today. An acquisition may include costs needed to place the equipment in service, while later repairs need separate classification.

Select the book-accounting policy and the applicable tax method independently.

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Double-declining balance applies twice the straight-line rate to the remaining book value, so the first years carry the largest charge. On a $50,000 asset over five years the rate is 40 percent, giving $20,000 in year one and $12,000 in year two. The method stops when book value reaches salvage, so the last years shrink or vanish.

The full schedule on the $50,000 example runs $20,000, $12,000, $7,200, $4,320 and $1,480 across the five years, with book value falling to $30,000, $18,000, $10,800, $6,480 and $5,000.

Look at the book value column against salvage. Once they meet, later years show zero, and that is the method working, not an error.

Compare with the straight-line and sum-of-years'-digits calculators, and see the units of production page for usage-based methods. The equipment lease versus buy calculator shows how depreciation affects the buy decision. Book and tax depreciation serve different purposes.

Tax methods follow the applicable filing rules.

Depreciation methods compared

Will this always reach salvage at the end of useful life?

No. For $50,000 cost, five-year life and zero salvage, pure 40% declining balance leaves $3,888 after year five. A switch to straight-line or a final adjustment is a separate accounting policy.

Why use double-declining balance?

It matches the higher early cost of assets that lose value fast and defers taxes by taking larger deductions in the first years.

Does it depreciate the asset below salvage value?

No. Depreciation stops once book value reaches salvage, and companies usually switch to straight-line when it becomes larger.

Is total depreciation different from straight-line?

No. Both methods depreciate the same total amount, cost less salvage, but double-declining takes more of it in the early years.

Double Declining Balance Depreciation Calculator