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formula. The assumption in this depreciation method is that the annual cost of depreciation is the fixed
percentage (1 - K) of the Book Value (BV) at the beginning of the year.
𝐿 𝐶𝐿 𝑛 𝐶𝑛
𝑘 =1− √ =1− √
𝐶𝑜 𝐶0
𝑑𝑛 = 𝐶𝑜(1 − 𝑘)𝑛−1 𝑘
𝑛
𝐶𝑙 𝐿
𝐶𝑛 = 𝐶𝑜(1 − 𝑘)𝑛 = 𝐶𝑜 ( )
𝐶𝑜
𝐶𝑙 = 𝐶𝑜(1 − 𝑘)𝑙
𝐷𝑛 = 𝐶𝑜 − 𝐶𝑛
This method does not apply if Cl=0
Example No. 1
Determine the rate of depreciation, total depreciation up to the end of 8 years and the book value at the end of
8 years of an assets that cost Php 15,000 new and has estimated scrap value of Php 2,000 at the end of 10
years using declining balance method.
Example No. 2
. An industrial plant bought a generator set for 90,000. Other expenses including installation amounted to 10,000. The
generator set is to have a life of 17 years with a salvage value at the end of life of 5,000. Determine the depreciation
charge during the 13th year and the book value at the end of 13 years by the (a) declining balance method,
Given:
n = 13 years
A plant bought by calciner for Php 220,000 and used it for 10 years, the life span of the equipment. what is the book
value of the calciner after 5 years of use. Assume the scarp value is Php 22,000. Use declining balance method.
2 𝑛−1 2
𝑑𝑛 = 𝐶𝑜 (1 − ) ( )
𝐿 𝐿
2 𝑛
𝐶𝑛 = 𝐶𝑜 (1 − )
𝐿
2 𝐿
𝐶𝑙 = 𝐶𝑜 (1 − )
𝐿
𝐷𝑛 = 𝐶𝑜 − 𝐶𝑛
Example No. 1
Determine the rate of depreciation, total depreciation up to the end of 8 years and the book value at the end
of 8 years of an assets that cost Php 15,000 new and has estimated scrap value of Php 2,000 at the end of 10
years using double declining balance method
Example No. 2
An industrial plant bought a generator set for 90,000. Other expenses including installation amounted to 10,000. The
generator set is to have a life of 17 years with a salvage value at the end of life of 5,000. Determine the depreciation
charge during the 13th year and the book value at the end of 13 years by the (a) double declining balance method,
Given:
n = 13 years
A plant bought by calciner for Php 220,000 and used it for 10 years, the life span of the equipment. what is the book
value of the calciner after 5 years of use. Assume the scarp value is Php 20,000. Use double declining balance method.
THE SUM-OF-THE-YEARS-DIGITS(SYD) METHOD
Let dn= depreciation charge during the nth year
dn=(depreciation factor)( total depreciation)
𝑟𝑒𝑣𝑒𝑟𝑠𝑒 𝑑𝑖𝑔𝑖𝑡
dn= ( 𝐶𝑜 − 𝐶𝑙)
𝑠𝑢𝑚 𝑜𝑓 𝑑𝑖𝑔𝑖𝑡𝑠
Example 2.
A machine costs Php 7,000, last 8 years and has salvage value at the end of life of Php 350. Determine
the depreciation charge during the 4th year and the book value at the end of 4th years by the SYD method.