This preview shows page 1. Sign up to view the full content.
Unformatted text preview: from the row its on, the
factor from cell B7, and the instruction to switch to straightline when it is more beneficial. In the
templates, this is not changeable – it is set to “Switch.” A word about the periods issue – since every
period of declining balance depreciation has its own unique value the formula must know what
depreciation period it is in. This formula is capable of determining the accumulated depreciation between
any two points of the asset’s life. Assume you are preparing to sell an asset under “DDB” depreciation
scheduling at the end of the 8th year of its 10 year life. You can use this formula written as
=VDB(100000,5000,10,0,8,200%,1) to determine that accumulated depreciation to date would be
$83,222.78. In the data file you are trying to determine each period depreciation so you use 0 for the start
of the first period and 1 as its end. For the second period you are using a reference to end of period 1 as
the start of this period and a reference to period 2 as the end of this period. Chapter 14, Page 91
Tip: It is very dangerous to use the “VDB” formula to determine accumulated depreciation for
declaration of gain and loss on asset disposal since this mathematical calculation may not match the actual
journalized values for depreciation.
By using the “VDB” formula and enabling it to switch to straightline depreciation when more
beneficial there is no need for the adjustment required at the end of the life cycle as shown in the “DDB”
formula section. Additionally, this formula will not violate salvage value if the switch is enabled. SumOfYear’sDigits Depreciation
Excel handles Sumofyear’s digits depreciation through the “SYD” formula. On the “Sum of Year’s
Digits” worksheet of the “Depreciation” data file you will see this formula in action. The sumofyear’s
digits formula requires the cost, the salvage value, the life, and the period. With the “SYD” formula it is
recommended that you remain with years as life and divide the annual amount of depreciation by 12 if
you are posting depreciation monthly or divid...
View Full
Document
 Fall '10
 Ullmann
 Accounting

Click to edit the document details