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WHAT IS THE REDUCING BALANCE METHOD OF DEPRECIATION?
The reducing balance method is one of the main methods to calculate the depreciation of an asset. The reducing balance method of depreciation is a technique used when an asset's worth will decrease in value by different amounts each year. In order to find out how much the asset is going to be depreciated by each year, the following factors will need to be identified...the cost, the residual value, the useful life and finally the last factor is the net book value. After each year the assets value after depreciation is then used as the opening value for the next year in replacement of the cost. Rate of deprecation as a percentage = (1/useful life) x 100.

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