How To Calculate Depreciation Reducing Balance Method. To set up 200% reducing balance depreciation, you must also select options in the depreciation year field. Calculate the depreciation for the first year of its life using double declining balance method.

The declining balance method of depreciation, also known as the reducing balance method of depreciation, is a method in which depreciation calculated on the asset is deducted from the book value of the asset at the beginning of the year, the value of which is arrived at by multiplying the depreciation rate to the book value of the asset which has a greater amount in. Asset book value is the value of the asset for accounting purposes. Depreciation reducing balance method example.

How To Calculate Depreciation Percentage Using Reducing Balance Method. How to calculate depreciation on assets bought or sold within an accounting period. Accountants will then divide this number by 12 months and post this figure into the company’s general ledger.

From that you can then calculate the constant reducing balance percentage, which is 27½%. It is calculated using the following formula: This means more depreciation occurs in the beginning of useful life of an asset.