Declining Balance Method - Depreciation - Accounting

The video tutorial explains the declining balance method, an accelerated depreciation technique that results in higher depreciation expenses in the early years of an asset's life. It covers the calculation steps, including finding the straight line rate, adjusting it to a double declining rate, and applying it to the book value. The tutorial emphasizes the importance of not confusing this method with the straight line method and provides insights into calculating book value.

What is another name for the declining balance method?

• Accelerated depreciation

• Unit of production method

• Straight-line depreciation

• Sum of the years' digits method

In the double declining balance method, how is the double declining rate calculated?

• By dividing the useful life by two

• By multiplying the straight-line rate by two

• By adding two to the straight-line rate

• By subtracting two from the straight-line rate

What is the first step in calculating depreciation using the declining balance method?

• Finding the book value

• Calculating the accumulated depreciation

• Determining the straight-line rate

• Multiplying by the double declining rate

What does the book value represent in the context of the declining balance method?

• The original cost of the asset

• The market value of the asset

• The asset's value on the books after depreciation

• The salvage value of the asset

How does the book value change over the years in the declining balance method?

• It remains constant

• It increases each year

• It decreases as depreciation accumulates

• It fluctuates randomly