Matching principle and double decline depreciation has a great and important relationship. (True or False?)

The statement is true. 

Because  the  company's financial reports such as  the income statement, the balance sheet, the cash flow statement and the statement of owners' equity - represent the company's financial health and progress, they can't provide a perfectly accurate picture. There are always assumptions built into many of the items on these statements that, if changed, can have greater or lesser effects on the company's bottom line and/or apparent health. So matching principle and double decline depreciation is good giving  assumptions in depreciation impact the value of long-term assets and how this can affect short-term earnings results.

In my opinion this statement is true.  Thanks for the invitation

True.

The principle states that any expense or income incurred should be recorded in the same period.

If there is a relation in income and revenue it should be recorded at the same time.

In this state the principle matches higher expense in earlier stages and lower expense in later stages.

Ex: Delivery Van used for delivery should be depreciated in the same month when the sale was recorded. 

Hello Team,

It is a depreciation method in which the depreciation rate is applied double to that in straight line method. The depreciation in this method is charged on the complete purchase price of asset rather than the net of salvage value price in straight line method. In other words we can say that double declining depreciation method uses double the rate of straight line method.

It is a common form of accelerated depreciation also known as 200 times declining balance method. Accelerated means that the depreciation amount in the beginning will be greater than the rate taken out with straight line method. The main purpose is to charge greater depreciation in the beginning useful life years but gradually the depreciation amount decreases. It does not mean that since the amount is greater in the beginning years the depreciation charged through out the useful life will be greater than the straight line method.

For example an asset is purchased at a cost of $100,000 having no salvage values and a useful life of ten years. The depreciation lets suppose is 10% for straight line method so, with the double declining method the rate will become 20%. Since there is no depreciation in the first year the depreciation will be calculated as $100000*10%=$20,000. The book value now becomes $100,000-$20000= $80000 so for the 2nd year depreciation by double declining method will become $80000*20%=$16000.

The process carries on till the end of useful life. The accumulated depreciation for the two years will become $20,000+$16000 and the book value will be the accumulated depreciation minus the book value for one year. The main idea is to depreciate the asset value steeply through the early years of useful life due to which the depreciation expenses become large in the early years and small in the remaining years.

As it is clear that the depreciation amount is decreased in the 2nd year which is going to decrease further through out the life. Few people during useful life of the asset switches to straight line method, others stick to the original method depending on the case.

Regards,

Saiyid

Matching principle states that expense and revenue should be recorded in the period in which they occur.

Depreciation means "Reduction". In accounting terms, charging depreciation means to reduce value of the asset due to consistent use of asset, wear & tear etc. Normally, asset looses its value in the later period and not in the earlier period.

Double declining depreciation method charges the depreciation more in the earlier period and lesser in the later period. The reason behind using this method is that repair and maintenance of asset increases with the use of the asset and so in the later periods, the expenditure of R&M increases. To avoid double burden on P&L of a period i-e of R&M and depreciation, higher charge on account of depreciation is made in earlier periods.

The asset generates more revenue in the earlier periods of use and therefore if, we are using double declining method, the expense on account of depreciation will also be charged more in the earlier period and hence we can see the matching principle is implemented. Therefore, "THE STATEMENT IS TRUE".

Thanks.

Thanks for invitation.

The statement is TRUE.

agree with all expert answers above

False

Double Declining depreciation is method of depreciation adopted by the management. This is part of accounting policy adopted by the management.

Sometimes it is allowed as a additional benefit to claim in income tax.

if matching principles to adopt then working for 3 shift factory triple depreciation to adopt why double declining?

Thank you for the invitation I agree with the experts answers

............True...................