Depreciation Methods for Beginners

Measuring Depreciation can be confusing. If measuring Depreciation has you scratching your head? You’re not alone — it’s one of the most misunderstood concepts in accounting. In this video, I’ll break down what depreciation really is, why it lowers your profit but not your cash, and how it shows up on your financial statements. Then we’ll dive into the two most common GAAP-approved methods: ✅ Straight-Line Depreciation — simple, consistent, and predictable ✅ Double Declining Balance (DDB) — faster write-off for assets that lose value quickly You’ll get clear, real-world examples, step-by-step calculations, monthly depreciation schedules, and journal entries — all explained in a way that actually makes sense. Whether you’re a business owner, accounting student, or just trying to understand your numbers better — this video will help you finally “get” depreciation. Have more questions? leave a comment below CHAPTERS 0:00 – Why Depreciation Lowers Profit but Not Cash 1:08 – What Is Depreciation? (Simple Explanation + Real Example) 02:04 – Why we spread cost over time (matching principle) GAAP 2:47 – Why Depreciation Matters (Profit, Taxes, KPIs) 03:40 – Depreciation on financial statements (P&L + Balance Sheet) 5:44 – GAAP Depreciation Methods Overview 6:32 – Straight-Line Depreciation: Formula + Journal Entry 8:34 – Double Declining Balance: Formula + Examples 09:02 – DDB formula and rate calculation 12:10 – Monthly DDB Depreciation Schedule 13:55 – DDB monthly journal entry 14:49 – Accumulated Depreciation on the Balance Sheet 16:03 – Why Depreciation Still Matters in Business Valuation 16:38 – What Accountants Need to Know in the AI Era 17:23 – Final Recap + Why This Actually Matters