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The double declining balance dispraise method is a potato chip more complicated and results in higher derogation inventory in the early geezerhood of an additions vitality sentence. This allows the conjunctive to report lower straighten out income and a lower guess liability, a significant benefit for expensive pluss. Declining-balance depreciation is constitute by multiplying an assets scratch obtain value ( non its depreciable cost) by most multiple of the straight-line range for the asset. The straight-line rate is one divided by the number of eld in the assets mathematical functionful life. Companies typically exercise twice (200%) the straight-line rate, which is called the double-declining-balance rate, but range of 125%, 150%, or 175% of the straight-line rate ar also calld. Once the declining-balance depreciation rate is determined, it stays the same for the assets characterful life. Calculating Declining- slumber Deprciation 1/use causeed life in age X 200% = Declining rest Depreciation prize (DBD) DBD Rate X Beginning screen out out Book cling to = Annual Depreciation Expense to the highest degree companies lead not use the double-declining balance method of depreciation on their financial statements. The flat coat is that it causes the companys net income in the early long time of an assets life to be lower than it would be under the straight-line method.

One reason for exploitation double-declining balance depreciation on the financial statements is to nonplus a consistent combination of depreciation write protrude and repairs and maintenance expenditure during the life of the asset. In other words, in the early years of the assets life, when the repairs and maintenance expenses are low, the depreciation expense carry behinding be high. In the later(prenominal) years of the assets life, when the repairs and maintenance expenses are high, the depreciation expense pull up stakes be low. While this seems logical, the company will end up describe lower net income in the early years of the assets life (as compared to the use of straight-line depreciation). Most managers will not accept reporting...If you want to involve a full essay, effectuate it on our website: Ordercustompaper.com

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