What is the double declining balance formula?

Depreciation = book value at the start of the year × 2 ÷ useful life, but never taking the book value below salvage.

Why is salvage value not in the rate?

The rate depends only on the useful life; salvage acts as a floor for the book value.

When do you switch to straight-line?

In the first year that straight-line depreciation on the remaining depreciable balance exceeds the declining balance charge.

Does this match Excel's DDB function?

Yes with the switch turned off; with it on, it matches VDB.

Double Declining Balance Formula (DDB)

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Double Declining Balance Depreciation Calculator

Double declining balance is the most common accelerated depreciation method. Each year the asset’s book value is multiplied by twice the straight-line rate, 2 ÷ useful life. Salvage value is ignored when computing the rate, but depreciation stops once the book value reaches salvage. Because the charge is based on a shrinking balance, most of the cost is written off in the early years, which suits assets such as vehicles and computers that lose value fastest when new.

Formula

Depreciation_t = min(Book value_t−1 × FactorLife, Book value_t−1 − Salvage)

Where

Factor: 2 for double declining balance (1.5 for 150% declining balance)
Life: useful life in years
Book value_t−1: cost minus depreciation already taken
Salvage: the book value is never taken below this

Calculator

Asset cost

Salvage (residual) value

Useful life (years)

Factor

2 = double declining; 1.5 = 150% declining balance.

Switch to straight-line when it gives more?

Result and step-by-step solution

First-year depreciation

4,000.00

Rate 40% of book value per year. Final book value 1,000.00.

Declining-balance rate
25 = 40%
First year
10,000.00 × 0.4 = 4,000.00
Each later year
Opening book value × 0.4, never going below salvage, or straight-line on the remaining base when that is larger.

Schedule

Year	Book value at start	Depreciation	Accumulated	Book value at end
1	10,000.00	4,000.00	4,000.00	6,000.00
2	6,000.00	2,400.00	6,400.00	3,600.00
3	3,600.00	1,440.00	7,840.00	2,160.00
4	2,160.00	864.00	8,704.00	1,296.00
5	1,296.00	296.00	9,000.00	1,000.00

How to use the formula

Left alone, the declining balance never quite reaches salvage, so many businesses switch to straight-line depreciation on the remaining balance in the year that straight-line gives a larger charge. US tax depreciation (MACRS) does this, as does Excel’s VDB function. The calculator lets you choose: with the switch you match VDB; without it you match Excel’s DDB. You can also change the factor, for example to 1.5 for 150% declining balance.

For a 10,000 asset with a 1,000 salvage value and a 5-year life, the rate is 40%: depreciation is 4,000, 2,400, 1,440 and 864, and in the last year only 296 is allowed, bringing the book value to exactly 1,000. Compare with the even charge of straight-line or the smoother decline of sum-of-the-years’-digits.

Frequently asked questions

What is the double declining balance formula?: Depreciation = book value at the start of the year × 2 ÷ useful life, but never taking the book value below salvage.
Why is salvage value not in the rate?: The rate depends only on the useful life; salvage acts as a floor for the book value.
When do you switch to straight-line?: In the first year that straight-line depreciation on the remaining depreciable balance exceeds the declining balance charge.
Does this match Excel’s DDB function?: Yes with the switch turned off; with it on, it matches VDB.

Last reviewed: September 26, 2026. Calculations run in your browser and were checked against numpy-financial, SciPy and published spreadsheet examples.