There are various methods used to calculate the depreciation expense one of which is the declining balance depreciation method. This calculator will perform the declining balance depreciation calculation for you, and work out the annual depreciation expense and the depreciation rate.
The calculation is carried out using the declining balance depreciation formula which, each year, takes the net book value of the asset and multiples it by declining balance depreciation rate. The net book value is the cost of the asset less the accumulated depreciation to date.
Using this calculated declining balance rate, the asset will automatically be written down to its salvage value at the end of its useful life, at which point the depreciation expense is stopped.
The formula for declining balance depreciation is given as follows:
and the formula for the declining balance depreciation rate is given by
Full details of how the declining balance depreciation method is used can be found in our depreciation tutorial.
Using the Declining Balance Depreciation Calculator
The Excel declining balance depreciation calculator, available for download below, is used to compute declining balance depreciation by entering details relating to the asset. The calculator is used as follows:
- Enter the cost of the asset. The cost of the asset can be found in the long term asset account, asset register, or on the original source document (invoice) for the asset
- Enter the salvage value. The salvage or residual value is the amount the asset is expected to be worth at the end of its useful life.
- Enter the useful life. The useful life is the anticipated time in years which the asset is expected to be useful to the business. The declining balance depreciation calculator works out the declining balance depreciation rate. This is the rate which will write the asset down to its salvage value over its useful life.
- Enter the year. Enter the year for which the depreciation expense is required.
For example, if the depreciation is required for year fifteen of the assets life, enter the number 15. The declining balance depreciation calculator works out the depreciation expense for that year.
Declining Balance Depreciation Calculator Download
The declining balance depreciation spreadsheet is available for download in Excel format by following the link below.
Users use this declining balance depreciation calculator at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a declining balance method calculator that you might use when considering how to calculate declining balance depreciation. It is purely illustrative of a declining balance calculator. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in this declining depreciation calculator, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.