150% declining balance depreciation method—Fixed Assets Management

Fixed Assets Management supports the 150% declining balance method (150DB) for depreciating assets.

Under the 150% declining balance method, assets depreciate at 1.5 times the straight-line depreciation rate. This method results in higher depreciation amounts in the early years of an asset's useful life and gradually decreases over time as the asset's book value decreases. Any remaining depreciation is applied in the last period of the asset's life. Depreciation stops when the asset's book value equals the expected salvage value.

This method is not as accelerated as the 200% declining balance method. It strikes a balance between the straight-line method's equal allocation and the more aggressive 200% declining balance depreciation.

Conventions

This method supports the following conventions:

  • Full month

  • Half year

  • Full year

Formulas

  • Depreciation for each month:

     

    (C−AD)×1.5×(1÷UL)

  • Depreciation for the last month:

    C−S−AD

Variables

  • C = Asset cost
  • AD = Accumulated depreciation from all previous months
  • UL = Useful life in months
  • S = Salvage value

  • Depreciation for the first year:

     

    (C−AD)×1.5×(1÷UL)÷2

  • Depreciation for each subsequent year:

    (C−AD)×1.5×(1÷UL)

  • Depreciation for the last year:

    C−S−AD

The last year is added as an extra period to apply the remaining depreciation.

Variables

  • C = Asset cost
  • AD = Accumulated depreciation from all previous years
  • UL = Useful life in years
  • S = Salvage value

  • Depreciation for each year:

     

    (C−AD)×1.5×(1÷UL)

  • Depreciation for the last year:

    C−S−AD

Variables

  • C = Asset cost
  • AD = Accumulated depreciation from all previous years
  • UL = Useful life in years
  • S = Salvage value

Examples

Scenario:

  • Useful life: 60 months

  • Convention: Full month

  • Asset cost: £5,000.00

  • Salvage value: £100.00

  • In-service date: April 22nd, 2020

  • Use salvage value: True

Schedule:

Depreciation schedule
Period Scheduled posting date Depreciation amount (£) Calculation
1 April 30th, 2020 125.00 (5,000.00 asset cost − 0.00 accumulated depreciation) × (1.5 × (1 ÷ 60 months of useful life))
2 May 31st, 2020 121.88 (5,000.00 asset cost − 125.00 accumulated depreciation) × (1.5 × (1 ÷ 60 months of useful life))
3 June 30th, 2020 118.83 (5,000.00 asset cost − 246.88 accumulated depreciation) × (1.5 × (1 ÷ 60 months of useful life))
4 July 31st, 2020 115.86 (5,000.00 asset cost − 365.70 accumulated depreciation) × (1.5 × (1 ÷ 60 months of useful life))
5 August 31st, 2020 112.96 (5,000.00 asset cost − 481.56 accumulated depreciation) × (1.5 × (1 ÷ 60 months of useful life))
6 September 30th, 2020 110.14 (5,000.00 asset cost − 594.52 accumulated depreciation) × (1.5 × (1 ÷ 60 months of useful life))
... ... ... ...
60 March 31st, 2025 1,022.64 5,000.00 asset cost − 100.00 salvage value − 3,877.36 accumulated depreciation

Scenario:

  • Useful life: 5 years

  • Convention: Half year

  • Asset cost: £5,000.00

  • Salvage value: £100.00

  • In-service date: April 22nd, 2020

  • First tax month: January

  • Use salvage value: True

Schedule:

Depreciation schedule
Period Scheduled posting date Depreciation amount (£) Calculation
1 December 31st, 2020 750.00

(5,000.00 asset cost − 0.00 accumulated depreciation) × (1.5 × (1 ÷ 5 years of useful life)) ÷ 2
2 December 31st, 2021 1,275.00 (5,000.00 asset cost − 750.00 accumulated depreciation) × (1.5 × (1 ÷ 5 years of useful life))
3 December 31st, 2022 892.50 (5,000.00 asset cost − 2,025.00 accumulated depreciation) × (1.5 × (1 ÷ 5 years of useful life))
4 December 31st, 2023 624.75 (5,000.00 asset cost − 2,917.50 accumulated depreciation) × (1.5 × (1 ÷ 5 years of useful life))
5 December 31st, 2024 437.33 (5,000.00 asset cost − 3,542.25 accumulated depreciation) × (1.5 × (1 ÷ 5 years of useful life))
6 December 31st, 2025 920.42

5,000.00 asset cost − 100.00 salvage value − 3,979.58 accumulated depreciation

The remaining depreciation is applied in this extra period at the end of the asset's useful life.

Scenario:

  • Useful life: 5 years

  • Convention: Full year

  • Asset cost: £5,000.00

  • Salvage value: £100.00

  • In-service date: April 22nd, 2020

  • First tax month: January

  • Use salvage value: True

Schedule:

Depreciation schedule
Period Scheduled posting date Depreciation amount (£) Calculation
1 December 31st, 2020 1,500.00 (5,000.00 asset cost − 0.00 accumulated depreciation) × (1.5 × (1 ÷ 5 years of useful life))
2 December 31st, 2021 1,050.00 (5,000.00 asset cost − 1,500.00 accumulated depreciation) × (1.5 × (1 ÷ 5 years of useful life))
3 December 31st, 2022 735.00 (5,000.00 asset cost − 2,550.00 accumulated depreciation) × (1.5 × (1 ÷ 5 years of useful life))
4 December 31st, 2023 514.50 (5,000.00 asset cost − 3,285.00 accumulated depreciation) × (1.5 × (1 ÷ 5 years of useful life))
5 December 31st, 2024 1,100.50 5,000.00 asset cost − 100.00 salvage value − 3,799.50 accumulated depreciation