double declining balance method

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A method of depreciation in which the historical cost (or revalued amount) of an asset less its estimated residual value (see net residual value) is divided by the number of years of its estimated useful life and the resulting amount is multiplied by two to give the depreciation figure. For example, in the first year an asset costing £12,000 with an estimated residual value of £2000 and an estimated useful life of 10 years would have a depreciation charge of £2000, i.e. 2 × [(£12,000 – £2000)/10].

Subjects: Accounting.

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