AIPB Depreciation Exam Practice 2026 – Complete Study Resource

The double declining balance method of depreciation is an accelerated depreciation technique that applies twice the straight-line depreciation rate to the declining book value of an asset. This method is designed to front-load depreciation expenses, allowing for a greater allocation of depreciation in the earlier years of an asset's useful life.

To apply this method, you first calculate the straight-line depreciation rate by dividing 100% by the asset's useful life in years. Then, you double that rate and apply it to the asset's remaining book value at the beginning of each period (year). As the book value declines each year, the depreciation expense generates a larger deduction upfront, which can be advantageous for financial reporting and tax purposes.

This approach aligns with the idea that many assets lose functionality or value more quickly early in their lifespan, making it a relevant method for businesses that wish to reflect that in their financial statements.