How is depreciation expense calculated for the Double-Declining Balance method?

In the Double-Declining Balance method, depreciation expense is calculated using the book value of the asset at the beginning of the period, multiplied by the depreciation rate. This rate is typically calculated as double the straight-line rate of depreciation, which reflects a more accelerated depreciation approach compared to the straight-line method.

To clarify the concept further, the book value of an asset decreases each year as depreciation is applied, and in the Double-Declining Balance method, you always apply the depreciation rate to the current book value, not to the original cost or depreciable base. This results in higher depreciation expenses in the initial years of the asset's useful life, gradually decreasing over time. This approach is beneficial for matching the expense of an asset with its revenues, particularly in the earlier years when the asset may be more productive.

In summary, using the book value of the asset to calculate the depreciation expense aligns with the Double-Declining Balance method's objective of reflecting the asset's declining productivity and value over time.