yo yo yo what is going on everybody this is CPA strength I am the strongest
licensed CJ in the state of Florida Oh weight lifting been lifting for a bit
just like I've been doing this for a minute I happen to have the best
accounting playlist in the world because that's what I do I teach the world
accounting through building blocks this up here happens to be part of the best
playlist in the world just hit like a genie but all your dreams come true you
know what it is baby I'm in the middle of the day I got people coming by my
office going this kids crazy what's going on we're going to get this kid out
of this office man what's happening but I tell you what think of me I'm not
doing nothing but teaching the world accounting okay I'm not even cursed
anymore so get on with your little bad self and get on with your little life
because this is Friday now you go party because I'm partying for me right now
okay we're done as good as go boom this is number 63 of my classic series this
is a classic this is double declining balance depreciation alright we've done
we just did we just talked about accumulated depreciation we just talked
about depreciation in general what it is how you tractor it we just did single
line depreciation now this is double declining balance depreciation it's also
called an accelerated depreciation method now we're going to I'm going to
do a summary of this and that before but how do you do double declining balance
what is it all about just like everything else that in accounting let's
pick apart let's pick apart the name the title and
let's go back to straight-line depreciation method for one second the
way I like to remember straight-line okay the name says straight line it's
going to be the same depreciation every month all right so it's going to be a
straight line thousand dollars one year thousand dollars next year the next year
thousand dollars so it's a straight line of a thousand dollars that straight line
okay I'm sorry you're going to remember Lex
it's a straight line the same every year this is double declining balance double
it's going to be double the percent of straight line all right so when you see
double declining you're like double double double of the straight line all
right great and it also has balance in the
name of it so it's very key because you multiply by the book value balance
that's what you did you multiply by the book value the balance the balance of
the book value so it's in the title what are our factors now we have the same
factors here at first the ads in the straight line we bought a truck for
$5,000 our useful life is five years those are
the same factors in straight line but now on this one and double declining
balance we have a residual value of $500 the whole thing is straight line is the
same depreciation every year for the five years all right
and double declining balance is you take more depreciation in the beginning and
then at the end at each each year you take less and less and less because
there's a declining balance in whatever $5,000 five years we're getting our
percent our percentage so five years five years that's good so so every a per
year be 20% per year 20 40 60 80 100
that's how you get your percents how else could you get a percentage of front
of your spa Jerusalem one divided by five point two it's also how you can do
it but anyway so figure out straight lines twenty straight line would be 20
percent because you go for five years so you're in ten twenty twenty percent
every year you take 20 percent of your cost every year
that would be $1,000 for straight line all right now you multiply your straight
line your number one by two but you double it up let's then look that's in
the name doubles all right so you get your straight line percent now just like
the name says you double it so that's going to be the same forty percent every
year forty percent every year unless until it goes under the residual value
because you don't want to depreciate it more than it torts at the end step
number three you take the percentage that you got and you multiply it by the
book value and that's how you get your double declining balance now let's go
so really what we figured out here is forty percent annual the double define
annual depreciation relevance how much that's how much is now just go with our
facts here and we have residual value of five hundred in this example to start
off with body for five thousand dollars there's your cost now the cost isn't
going to change you that is the cost five thousand dollars that's the whole
way through something else I did notice doing this chart the accumulated
depreciation and the book value begins the year equals the cost so that makes
sense to everybody I hope because I just hope that makes sense and some what I
saw with doing these charts first year out you got for you but you cost five
thousand dollars we're done with the cost that's all I'm going to change
cumulative pre-shading zero because you haven't depreciated anything yet book
value beginning of the years five thousand dollars you multiply that by
forty percent this is the double declining balance five thousand times
forty percent is two thousand sortation two thousand dollars depreciations first
year you see in straight-line it was a
thousand each year a thousand thousand thousand thousand
so you're going to see you're taking double out the first year I just want
you to know that notice that both values 3000 at the end of the year start of the
second year you have you have that $2,000 community depreciation both value
of $3,000 because that was the booklet end of the year so that's the book value
the beginning of you now we're going to multiply that by 40% most has a book
died of double declining volumes and now the depreciation for the second year is
1200 that's more than straight lines so you're taking depreciation in the early
stages of the assets useful life and because it's an accelerated depreciation
method leaving us with a book value $1,800 the end of the year year three we
have $3,200 of accumulated depreciation now book value $1,800 multiply that by
40% double declining balance that is 720 dollars of depreciation for the third
year now compared to straight line at 1000 this is less no now we're taking
less depreciation you varic took more left enough quite later right yeah slow
it down leaves us with a Book value of $1,000 q a differentiation of 3914 year
for Book value of a thousand eighty once without by 40% depreciation for the
fourth year four hundred and four hundred and thirty-two dollars now it's
really not that much and we have end of the year Book value of six hundred and
forty eight dollars that's our book value the rest of the 5,000 is
accumulated depreciation 4352 so we only have it's only worth on our
book $648 now on our fifth year we're taking 40% of that but hold on a second
I thought my calculator bra where'd I put my calculator bro if you took six
hundred to six hundred and forty eight times forty percent here six hundred and
forty eight times point four that's like $259 so if you have if you
put that that would leave us with less than $500 residual value which we don't
want to do because that's how much it's going to be worth when we're done with
the asset so this last year we're just cars we're just going to have
as much depreciation allows to have our asset end with five hundred dollars so
that one hundred and forty eight dollars so you can see how that's a little
different than straight line straight line over a thousand dollars each year
but in this example we took an accelerated method so we took a lot more
double than sprinkling this year one of the more than straight-line less than
straight-line a lot less than straight-line a really really really a
lot less than straight-line you know what this went long enough and this was
this is going to be double declining balance with residual value on the neck
next video I'm going to do is double declining balance without the residual
value let's check out a little minute to talk what am I going to say I don't know
let's focus on bettering ourselves let's talk about let's think about let's think
about not you know let's see if I'm not not talking about other people's you
know what what good does that do you know talking trash about people just
let's just try to try to uplift other people let's try to do better right
let's try to stay positive let let's watch my next accounting video do that
let's like share subscribe all that good stuff and I'll see you next time juice