what is the double declining balance ddb depreciation method 
the double declining balance depreciation ddb method also known as the reducing balance method is one of two common methods a business uses to account for the expense of a long lived asset the double declining balance depreciation method is an accelerated depreciation method that counts as an expense more rapidly when compared to straight line depreciation that uses the same amount of depreciation each year over an asset s useful life similarly compared to the standard declining balance method the double declining method depreciates assets twice as quickly investopedia madelyn goodnightdouble declining balance ddb depreciation formulaunderstanding ddb depreciationthe declining balance method is one of the two accelerated depreciation methods and it uses a depreciation rate that is some multiple of the straight line method rate the double declining balance ddb method is a type of declining balance method that instead uses double the normal depreciation rate depreciation rates used in the declining balance method could be 150 200 double or 250 of the straight line rate when the depreciation rate for the declining balance method is set as a multiple doubling the straight line rate the declining balance method is effectively the double declining balance method over the depreciation process the double depreciation rate remains constant and is applied to the reducing book value each depreciation period the book value or depreciation base of an asset declines over time with the constant double depreciation rate and a successively lower depreciation base charges calculated with this method continually drop the balance of the book value is eventually reduced to the asset s salvage value after the last depreciation period however the final depreciation charge may have to be limited to a lesser amount to keep the salvage value as estimated under the generally accepted accounting principles gaap for public companies expenses are recorded in the same period as the revenue that is earned as a result of those expenses 1 thus when a company purchases an expensive asset that will be used for many years it does not deduct the entire purchase price as a business expense in the year of purchase but instead deducts the price over several years 2because the double declining balance method results in larger depreciation expenses near the beginning of an asset s life and smaller depreciation expenses later on it makes sense to use this method with assets that lose value quickly double declining balance depreciation allows for higher depreciation expenses in early years and lower expenses as an asset nears the end of its life this is considered an accelerated depreciation method example of ddb depreciationas a hypothetical example suppose a business purchased a 30 000 delivery truck which was expected to last for 10 years after 10 years it would be worth 3 000 its salvage value under the straight line depreciation method the company would deduct 2 700 per year for 10 years that is 30 000 minus 3 000 divided by 10 using the double declining balance method however one would first calculate the straight line depreciation sldp as 1 10 years of useful life 10 per year they would then double the sldp 10 x2 20 and thus deduct 20 of 30 000 6 000 in year one 20 of 24 000 4 800 in year two and so on stopping when the book value equaled the salvage value 