7. Double Declining Depreciation

The double declining balance depreciation differs from the declining balance in that it uses a coefficient for calculating the depreciation. The coefficient, defined in 'Depreciation Template. Open for Declining Depreciation' (FAS025), is based on acquisition date and asset life span. If the number of years for the life span is higher than 0 when calculating the depreciation in (FAS010), a coefficient is automatically searched for. The formula is:

(1/number of years) x the coefficient=depreciation

The double declining method is a fiscally accepted method in many countries.

7.1 Example

An asset has a life span of five years. The normal depreciation rate is 25 percent. Since you have defined that the coefficient for adjusting the rate for assets with a five-year life span should be is set to 1.5, the depreciation is (25 x 1.5) = 37.5 percent.

This method was originally designed for France.