The variable declining balance worksheet in the

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: -line depreciation when that method is more beneficial. The Variable Declining Balance method is addressed later. Book value: Period Book depreciation: value: $100,00 0.00 $24,000.00 $36,00 0.00 $36,000 .00 Variable Declining Depreciation $60,00 0.00 $60,000 .00 Had the salvage or been $5,000, the last expense would have been computed by the $40,000.00 $14,400.00 $21,60 0.00 $21,600 .00 $8,640.00 $12,960 .00 $5,184.00 $12,96 residual value of this asset 0.00 period’s depreciation $7,960, not the $5,184 value $7,776. 00 mathematical operation. Balance Excel has a formula that will handle the concept of accelerated depreciation at the outset of the schedule and then converting to straight-line when straight-line depreciation becomes beneficial. This is accomplished through the “VDB” formula or “Variable Declining Balance.” Like the “DDB” formula, “VDB” requires cost, salvage value, life, period reference, and factor. “VDB” also requires a specific statement if you want to switch to straight-line depreciation or retain accelerated depreciation throughout the schedule. By inserting a 1 (one) into the “No Switch” window, Excel will maintain accelerated depreciation through the life of the asset, by inserting a 0 (zero), Excel will switch to straight-line depreciation when it provides a greater benefit (more depreciation in the period) than continued accelerated depreciation. The “Variable Declining Balance” worksheet in the “Depreciation” data file shows this formula in action. The way the formulas in column A works is explained in the “Straight-Line Depreciation” section – it determines if there are depreciation periods available. The depreciation formula in cell B12, reads “=IF(A12="","",VDB($B$2,$B$4,$B$5,0,A12,$B$7,0)).” After checking to see if depreciation periods are available through the “If” statement, the “VDB” formula looks for cost in cell B2, salvage or residual value in cell B4, the life in cell B5, the start period – 0 (zero) in this case since it is the first period, later lines will read the previous period from the line above, then the period its in...
View Full Document

Ask a homework question - tutors are online