Ms Ahmed traders & supplier_20230812_210948_0000
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We have more then 15 years of selling experience. All of our customers are setisfied.

Our Motive is To Create a healthy and strong city with our best products 

Q: What products do you offer at M/S Ahmed Traders?


A: We offer a variety of iron and cement products for construction and related purposes


Q: Can you provide different types of iron available in your shop?


 A: Yes, we offer various types of iron, including rebar, angles, beams, and sheets.


Q: What brands of cement do you stock? 


A: We stock a range of reputable cement brands suitable for construction projects.


Q: Do you offer bulk purchasing options for contractors? 


A: Yes, we provide bulk purchasing options to cater to the needs of contractors and large projects.


Q: Can customers get advice on choosing the right materials for their projects? 


A: Absolutely, our knowledgeable staff is here to assist customers in selecting the appropriate iron and cement products for their projects.

Double Declining Balance Depreciation Method, Guide
double declining balance method

Under the DDB depreciation method, the equipment loses $80,000 in value during its first year of use, $48,000 in the second and so on until it reaches its salvage price of $25,000 in year five. DDB depreciation is less advantageous when a business owner wants to spread out the tax benefits of depreciation over the useful life of a product. This is preferable for businesses that may not be profitable yet and therefore may not be able to capitalize on greater depreciation write-offs, or double declining balance method businesses that turn equipment over quickly. With your second year of depreciation totaling $6,720, that leaves a book value of $10,080, which will be used when calculating your third year of depreciation. The following table illustrates double declining depreciation totals for the truck. While some accounting software applications have fixed asset and depreciation management capability, you’ll likely have to manually record a depreciation journal entry into your software application.

It is important to note that we apply the depreciation rate on the full cost rather than the depreciable cost (cost minus salvage value). Unlike the straight-line method, the double-declining method depreciates a higher portion of the asset’s cost in the early years and reduces the amount of expense charged in later years. Using this information, you can figure the double declining balance depreciation percentage to be ⅖ each year, or 40%.

Alternative Methods

In DDB depreciation the asset’s estimated salvage value is initially ignored in the calculations. However, the depreciation will stop when the asset’s book value is equal to the estimated salvage value. In this example, the depreciation will continue until the credit balance in Accumulated Depreciation reaches $10,000 (the equipment’s depreciable cost). If the equipment continues to be used, no further depreciation expense will be reported. The account balances remain in the general ledger until the equipment is sold, scrapped, etc.

The company estimates that its useful life will be five years and its salvage value at the end of its useful life would be $1,250. At the beginning of the first year, the fixture’s book value is $100,000 since the fixtures have not yet had any depreciation. Therefore, under the double declining balance method the $100,000 of book value will be multiplied by 20% and will result in $20,000 of depreciation for Year 1. The journal entry will be a debit of $20,000 to Depreciation Expense and a credit of $20,000 to Accumulated Depreciation. Sara wants to know the amounts of depreciation expense and asset value she needs to show in her financial statements prepared on 31 December each year if the double-declining method is used.

Why You Can Trust Finance Strategists

We may earn a commission when you click on a link or make a purchase through the links on our site. All of our content is based on objective analysis, and the opinions are our own. Residual value is considered only in the last year of the asset's life. This is when that year's depreciation is limited to the amount that will reduce the asset's book value to its residual value. By contrast, the opposite is true when applying the straight-line method, the unit-of-production method, and the sum-of-the-years-digits method. Because the book value declines as the asset ages and the rate stays constant, the depreciation charge falls each year.

However, you should be aware of the method your company uses to maintain its books of accounts. It's always best to have a rationale for why you're using a particular method and the purpose the method serves https://www.bookstime.com/articles/what-is-order-of-liquidity for your new business. If you start writing off your asset early on, your tax obligation will reduce significantly. With every passing year, the income coming from that asset will also decrease.

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