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.

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Answered by Bushra B. Accounting tutor

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