The declining balance method of calculating depreciation enables companies to accelerate the rate at which they claim the tax benefits inherent in asset depreciation. As the name implies, the double declining balance depreciation method doubles the rate at which the declining balance method calculates an asset’s depreciation.
- [Voiceover] Businesses must invest…in new property, plant, and equipment,…as well as research and development…to encourage economic growth…and also the growth of the firm.…The government helps encourage that…by allowing companies to depreciate their assets.…For example, you might buy an office building…or build an office building…and be able to depreciate it over its 30 year economic life.…In this movie, I will show you…the Double Declining Balance Method…of depreciation, which is often used on tax returns…because it allows so much depreciation…to be taken early on in the life of an investment.…
My sample file is Double Declining 0203…and you can find it in the Chapter Two folder…of the Exercise Files Collection.…In this case, I assume that the Item is an Office Building.…It has an Initial Cost of 34 million dollars.…A Salvage Value, that is what it can be sold for…at the end of its economic life of one million dollars.…And I also assume, as with most buildings,…that it has an Economic Life of 30 years.…You can look up the economic life…
- Analyzing loans, payments, and interest
- Calculating depreciation
- Determining values and rates of return
- Calculating bond coupon dates and security durations
- Calculating security prices and yields
- Calculating prices and yields of securities with odd periods
Skill Level Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 24s
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