Double-declining balance applies a rate of 2 ÷ useful life to the asset's opening book value each year. For a 5-year asset that is 2 × 20% = 40%. It is the most aggressive of the common accelerated book methods.
Worked example
Cost $30,000, salvage $5,000, life 5 years, rate 40%.
| Year | Opening NBV | Calculation | Depreciation | Closing NBV |
|---|---|---|---|---|
| 1 | $30,000 | 40% × $30,000 | $12,000 | $18,000 |
| 2 | $18,000 | 40% × $18,000 | $7,200 | $10,800 |
| 3 | $10,800 | 40% × $10,800 | $4,320 | $6,480 |
| 4 | $6,480 | 40% would be $2,592 — capped at NBV − salvage | $1,480 | $5,000 |
| 5 | $5,000 | Already at salvage | $0 | $5,000 |
Why use it
DDB suits assets that lose value quickly — some vehicles and technology — and matches higher early depreciation with the period of greatest usefulness. For tax, US MACRS uses a 200% declining balance method (switching to straight-line) for many asset classes.
Try the numbers yourself in our free depreciation calculator.
In Asetavo
DDB is one of Asetavo's eight depreciation methods, with the salvage floor applied automatically.