The double-declining balance method is applied by (1) computing the asset's straight-line depreciation rate, (2) doubling it, (3) subtracting residual value from cost, and (4) multiplying the rate times the net value.

Question

Quizplus · Accepted Answer

The four steps listed are correct for the double-declining balance method, but the order is incorrect. The correct order is:

1. Subtract the asset's residual value from its cost.
2. Double the straight-line depreciation rate.
3. Apply the resulting rate to the net value to calculate depreciation expense.
4. Subtract depreciation expense from the net value to determine the book value for the next period.

The Double-Declining Balance Method Is Applied by (1) Computing the Asset's