diminishing-balance method
- diminishing-balance method
A method of computing the depreciation of a fixed asset in an accounting period, in which the percentage to be charged against income is based on the depreciated value at the beginning of the period (see net book value). This has the effect of reducing the annual depreciation charge against profits year by year. The annual percentage to be applied to the annual depreciated value is determined by the formula:
rate of depreciation = 1 - (S-C)1/-N, where N is the estimated life in years, S is the estimated scrap value at the end of its useful life, and C is the original cost.
Big dictionary of business and management.
2014.
Look at other dictionaries:
diminishing balance method — UK }} US }} noun [S] ACCOUNTING ► DECLINING BALANCE METHOD(Cf. ↑declining balance method) … Financial and business terms
diminishing-balance method — reducing balance method A method of computing the depreciation of a fixed asset in an accounting period, in which the percentage to be charged against income is based on the depreciated value at the beginning of the period (see net book value).… … Accounting dictionary
declining balance method — ➔ method * * * declining balance method UK US noun [S] (also diminishing balance method, also reducing balance method) ► ACCOUNTING a way of depreciating (= reducing the value of) a fixed asset in a company s accounts , in which the asset s v … Financial and business terms
declining balance method — See: diminishing balance method … Accounting dictionary
reducing-balance method — See: diminishing balance method … Accounting dictionary
reducing-balance method — See diminishing balance method … Big dictionary of business and management
method — meth‧od [ˈmeθəd] noun [countable] a planned way of doing something, especially one that a lot of people use: method of • It is best to consider all methods of figuring your annual income tax before deciding on any one option. method for • A buy… … Financial and business terms
annuity method — A method of calculating the depreciation on a fixed asset. The objective of the method is to produce an approximately constant annual charge for the total depreciation and cost of capital of an asset. It is calculated in such a way that a low… … Accounting dictionary
Written-Down Value — The value of an asset after accounting for depreciation or amortization. Written down value is also called book value or net book value. It is calculated by subtracting accumulated depreciation or amortization from the asset s original value.… … Investment dictionary
depreciation — 1) The measure of the cost or revalued amount (see revaluation) of the economic benefits of a tangible fixed asset that have been consumed during an accounting period. This includes the wearing out, using up, or other reduction in the useful… … Accounting dictionary
