Comparison of Depreciation Methods  



Practice for Comparing Different Depreciation Methods


In this practice we will compare the various depreciation methods for an asset that has a life of 10 years, a cost of $80,000 and a Salvage value of $6000.
  1. Create a new worksheet named Compare. Enter the data as shown below.

    2. Depreciation Comparion Methods start

  2. Click in cell B6. button. Click on the Insert Function button.Excel ribbon function button
    Type Depreciation in the Search for a function: text box. Click on the Go button. Excel displays a list of all the depreciation methods.

    Insert Function SLN

    Click on function SLN. Click on the OK button.

    Insert Function Arguments SLN

  3. With the cursor in the Cost text box click on cell B1. Press F4. Press the Tab key.
  4. With the cursor in the Salvage text box click on cell B2. Press F4. Press the Tab key.
  5. With the cursor in the Life text box click on cell B3. Press F4.
  6. Click on the OK button.
  7. Using the AutoFill handle drag down through cell B15.
  8. Click in cell C6.
    The first year of the Book value will be computed differently than the other nine years. For the first year we will take the cost minus the first year’s depreciation.
    Type =B1-B6.  Press Enter.
  9. Starting with year 2 we compute the current year’s book value by taking the previous’s book value minus the current year’s depreciation. We will then copy this formula down through row 17 using relative cell addressing.
    Type =C6-B7 in cell C7. Press Ctrl + Enter. Using the AutoFill handle drag down through cell C15.

Function SYD

  1. Click in cell D6. Click on the Insert Function button. Excel ribbon function button
  2. Type Depreciation in the Search for a function: text box. Click on the Go button.
    3. Click on function SYD. Click on the OK button.
  3. With the cursor in the Cost text box click on cell B1. Press F4. Press the Tab key.
  4. With the cursor in the Salvage text box click on cell B2. Press F4. Press the Tab key.
  5. With the cursor in the Life text box click on cell B3. Press F4. Press the Tab key.
  6. With the cursor in the Per text box click on cell A6. This argument will use relative cell addressing to adjust for the change in the period. Click on the OK button. Using the AutoFill handle drag down through cell D15.

    SYD Depreciation function Arguments

  1. Type =B1-D6 in cell in E6.
    Type =E6-D7 in cell E7. Press Ctrl + Enter
    Using the AutoFill handle drag down through cell E15.

Function DB

  1. Click in cell F6. Click on the Insert Function button. Excel ribbon function button
  2. Type Depreciation in the Search for a function: text box. Click on the Go button..
  3. Click on function DB. Click on the OK button.
  4. With the cursor in the Cost text box click on cell B1. Press F4. Press the Tab key.
  5. With the cursor in the Salvage text box click on cell B2. Press F4. Press the Tab key.
  6. With the cursor in the Life text box click on cell B3. Press F4. Press the Tab key.
  7. With the cursor in the Period text click on cell A6. This argument will use relative cell addressing to adjust for the change in the period. Click on the OK button. Using the AutoFill handle drag down through cell F15.
  8. Type =B1-F6 in cell in G6.
    Type =G6-F7 in cell G7. Press Ctrl + Enter.
    Using the AutoFill handle drag down through cell G15.

Function DDB

  1. Click in cell H6. Click on the Insert Function button.Excel ribbon function button
    Type Depreciation in the Search for a function: text box. Click on the Go button.
  2. Click on function DDB. Click on the OK button.
  3. With the cursor in the Cost text box click on cell B1. Press F4. Press the Tab key.
  4. With the cursor in the Salvage text box click on cell B2. Press F4. Press the Tab key.
  5. With the cursor in the Life text box click on cell B3. Press F4. Press the Tab key.
  6. With the cursor in the Period text click on cell A6.
    This argument will use relative cell addressing to adjust for the change in the period.
    Click on the OK button.
    Using the AutoFill handle drag down through cell H15.
  7. Type =B1-H6 in cell in I6.
    Type =I6-H7 in cell I7. Press Ctrl + Enter.
    Using the AutoFill handle drag down through cell I15.

Function VDP

  1. Click in cell J6. On the Formulas tab in the Function library group click on the Insert Function button. Type Depreciation in the Search for a function: text box. Click on the Go button.
  2. Click on function VDB. Click on the OK button.
  3. With the cursor in the Cost text box click on cell B1. Press F4. Press the Tab key.
  4. With the cursor in the Salvage text box click on cell B2. Press F4. Press the Tab key.
  5. With the cursor in the Life text box click on cell B3. Press F4. Press the Tab key.
  6. The start_period is 1 less than the current year so we will take the year in A6 and subtract 1 from it. Type A6 -1 in the Start_period text box.
  7. The End_period is the same as the current year. Type A6 in the End_period text box. Click on the OK button. Using the AutoFill handle drag down through cell J15.

    8. VDP Depreciation Function Arguments

     
  8. Type =B1-J6 in cell in K6. Type =K6-J7 in cell K7. Press Ctrl + Enter. Using the AutoFill handle drag down through cell G15.

DepreciationComparisonResults