The declining balance and double-declining balance methods let you capture most of an asset’s depreciation early in its economic life. These aggressive depreciation schedules generate huge tax offsets in the first few years. Using a variable declining balance approach mixes declining balance and straight-line strategies to capture more of the benefits toward the end of the asset’s life.
- [Voiceover] The declining balance…and the double declining balance methods of depreciation…let you capture most of an asset's depreciation…early in its economic life.…For a building, which usually has a useful life of 30 years,…these aggressive depreciation schedules…generate huge tax offsets in the first few years.…The downside, of course, is that you get to offset…almost no depreciation toward the end…of the asset's economic life.…Using a variable declining balance approach…mixes declining balance and straight-line strategies…to capture more of the benefits…toward the end of the asset's life.…
In this movie I will show you how to use…a variable declining balance approach.…My sample file is VariableDecliningBalance_02_05,…that's an Excel workbook that you can find…in the chapter two folder of the Exercise Files collection.…You need to know a fair amount of information…to use the variable declining balance method.…The first, of course, is the cost of the item.…The second is the salvage value.…The salvage value is the amount that you can sell…
- 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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