Variable Declining Balance (VDB)
Maximize your early-year deductions. This tool uses accelerated declining balance logic and intelligently switches to straight-line depreciation to ensure the asset is fully written down by the end of its life.
What is Variable Declining Balance (VDB) depreciation?
VDB is a depreciation method that uses the declining balance method but switches to straight-line depreciation when that results in a larger deduction. This ensures the asset is fully depreciated over its useful life.
Is VDB the same as MACRS?
VDB is the core logic behind the MACRS (Modified Accelerated Cost Recovery System) used for tax purposes in the US. MACRS specifically uses 150% or 200% declining balance with a mid-period switch to straight-line.
How do I choose the "Factor"?
The factor determines the acceleration. A factor of 2.0 is "Double Declining Balance" (200%). A factor of 1.5 is 150% declining balance. Higher factors result in more depreciation in the early years.
What happens when it switches to Straight-Line?
The calculator checks every period if the current declining balance amount is less than what a straight-line calculation would be for the remaining book value. When straight-line becomes higher, it "switches" to ensure the asset reaches its salvage value accurately.