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When using the double declining balance method the salvage value is not considered in determining the annual depreciation but the book value of the asset being depreciated is never brought below its salvage value regardless of the method used.

Balance sheet depreciation. Introduction to balance sheet. A balance sheet is a statement of the financial position of a business which states the assets liabilities and owners equity at a particular point in time. The accumulated depreciation account is used in accounting so that the recorded cost of the equipment can stay on the books and the contra asset account of accumulated depreciation is used so that the depreciation of the equipment can be kept track of year to year.

The total of stockholders equity is equal to the amounts listed on the balance sheet for assets minus the amounts listed on the balance sheet for liabilities. It shows a companys assets liabilities and equity accounts. A balance sheet reports a companys assets liabilities and shareholders equity at a specific point in time and provides a basis for computing rates of return and evaluating its capital.

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value. You can earn our financial statements certificate of achievement when you join pro plusto help you master this topic and earn your certificate you will also receive lifetime access to our premium financial statements materials. This balance sheet example and explanation will help you understand how the balance sheet works and how to read a balance sheet.

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