how to calculate reducing balance depreciation, provide an example.

In the reducing balance depreciation you have to deduct a same percentage from the carrying amount (historical cost of the asset - accumulated depreciation) of the asset each year. For example, cost of machine is 78124, uselful life is 4 years and a fixed percentage of depreciation on the carrying amount. in this case in the first year we calculate the 60% of the cost of the machine (7812460% = 46874), now deduct it from the cost to get the carrying amount ( 78124 - 46874 = 31250). in the second year apply the 60% on 31250 (carrying amount) (3125060% = 18750) and determine the second years carrying amount (31250 - 18750 =12500) and this process continues for 4 years.

BB
Answered by Bushra B. Accounting tutor

2509 Views

See similar Accounting GCSE tutors

Related Accounting GCSE answers

All answers ▸

What is the difference between capital expenditure and revenue expenditure?


What Is straight line depreciation?


List three ways in which the accounting equation can be written.


Can you explain the matching concept?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning