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
$7,776.
00 mathematical operation. Balance Excel has a formula that will handle the concept of accelerated depreciation at the outset of the schedule
and then converting to straightline when straightline depreciation becomes beneficial. This is
accomplished through the “VDB” formula or “Variable Declining Balance.” Like the “DDB” formula,
“VDB” requires cost, salvage value, life, period reference, and factor. “VDB” also requires a specific
statement if you want to switch to straightline depreciation or retain accelerated depreciation throughout
the schedule. By inserting a 1 (one) into the “No Switch” window, Excel will maintain accelerated
depreciation through the life of the asset, by inserting a 0 (zero), Excel will switch to straightline
depreciation when it provides a greater benefit (more depreciation in the period) than continued
accelerated depreciation. The “Variable Declining Balance” worksheet in the “Depreciation” data file
shows this formula in action.
The way the formulas in column A works is explained in the “StraightLine Depreciation” section – it
determines if there are depreciation periods available. The depreciation formula in cell B12, reads
“=IF(A12="","",VDB($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...
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 Fall '10
 Ullmann
 Accounting, Depreciation

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