Declining balance definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Declining balance can be defined as: Method that determines depreciation charge for the period by multiplying a depreciation rate (often twice the straight-line rate) by the assets’ begging period book value. Declining balance is an accelerated form of depreciation, depreciation being the allocation of the cost of fixed assets over their useful life. Double declining balance is the most common form of declining balance. When thinking of deprecation we often start with the straight line depreciation method and compare alternate formats to the straight line deprecation method. Double declining balance deprecation will first calculate the straight line depreciation rate and then multiply by 2, recording twice the deprecation in year one but then recording less deprecation in later years, total deprecation being the same over the life of the asset but the two method have a timing difference.
