Use the following three methods to compute the depreciation in columns B, C, and D: (1) double- declining balance, (2) straight-line, and (3) sum-of-the-years' digits. Columns F, G, and H should show the book value of each method for the 10 periods (10 years). Formulas should be used in the empty cells so that a change in the cost, salvage value, or expected useful life of the machinery automatically updates the worksheet. PDF page 1: Print cells A8:H20 into one page with proper format. PDF page 2: Print cell formulas in Cells A15:H15. You may edit the cell formulas into several lines if the cell formulas from Row 12 get to be too long to print into just one line. Prepare a line chart of the book value each year for each method and a bar chart showing the annual depreciation amounts. Appropriately size and place both charts into one page. PDF page 3: Print both charts in Step 4 into one page. Provide proper heading, legends, and size. Change the cost of the machine to $500,000, and the salvage value to be 17% of the purchase price as it is generally used in this industry, but keep the expected useful life still at 10 years. Compute the depreciation expenses and book values again using the three depreciation methods.
Use the following three methods to compute the depreciation in columns B, C, and D: (1) double- declining balance, (2) straight-line, and (3) sum-of-the-years' digits. Columns F, G, and H should show the book value of each method for the 10 periods (10 years). Formulas should be used in the empty cells so that a change in the cost, salvage value, or expected useful life of the machinery automatically updates the worksheet. PDF page 1: Print cells A8:H20 into one page with proper format. PDF page 2: Print cell formulas in Cells A15:H15. You may edit the cell formulas into several lines if the cell formulas from Row 12 get to be too long to print into just one line. Prepare a line chart of the book value each year for each method and a bar chart showing the annual depreciation amounts. Appropriately size and place both charts into one page. PDF page 3: Print both charts in Step 4 into one page. Provide proper heading, legends, and size. Change the cost of the machine to $500,000, and the salvage value to be 17% of the purchase price as it is generally used in this industry, but keep the expected useful life still at 10 years. Compute the depreciation expenses and book values again using the three depreciation methods.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Question
The Masters Corporation purchased a piece of machinery for $300,000. The expected useful life
(EUL) of the machine is 10 years. Machinery of this type normally has a salvage value of
approximately 17 percent of the purchase price (use $50,000 for salvage value in this case.) Using
the accounting/finance functions in Excel, complete the depreciation worksheet in Exercise11.xls in
the following steps:
1. Use the following three methods to compute the depreciation in columns B, C, and D: (1) double-
declining balance, (2) straight-line, and (3) sum-of-the-years’ digits. Columns F, G, and H should
show the book value of each method for the 10 periods (10 years). Formulas should be used in
the empty cells so that a change in the cost, salvage value, or expected useful life of the
machinery automatically updates the worksheet.
2. PDF page 1: Print cells A8:H20 into one page with proper format.
3. PDF page 2: Print cell formulas in Cells A15:H15. You may edit the cell formulas into several lines
if the cell formulas from Row 12 get to be too long to print into just one line.
4. Prepare a line chart of the book value each year for each method and a bar chart showing the
annual depreciation amounts. Appropriately size and place both charts into one page.
5. PDF page 3: Print both charts in Step 4 into one page. Provide proper heading, legends, and size.
6. Change the cost of the machine to $500,000, and the salvage value to be 17% of the purchase
price as it is generally used in this industry, but keep the expected useful life still at 10 years.
Compute the depreciation expenses and book values again using the three depreciation methods.
7. PDF page 4: Print cells A8:H20 into one page with proper format.
Transcribed Image Text:The Masters Corporation purchased a piece of machinery for $300,000. The expected useful life
(EUL) of the machine is 10 years. Machinery of this type normally has a salvage value of
approximately 17 percent of the purchase price (use $50,000 for salvage value in this case.) Using
the accounting/finance functions in Excel, complete the depreciation worksheet in Exercise 11.xls in
the following steps:
1. Use the following three methods to compute the depreciation in columns B, C, and D: (1) double-
declining balance, (2) straight-line, and (3) sum-of-the-years' digits. Columns F, G, and H should
show the book value of each method for the 10 periods (10 years). Formulas should be used in
the empty cells so that a change in the cost, salvage value, or expected useful life of the
machinery automatically updates the worksheet.
2. PDF page 1: Print cells A8:H20 into one page with proper format.
3. PDF page 2: Print cell formulas in Cells A15:H15. You may edit the cell formulas into several lines
if the cell formulas from Row 12 get to be too long to print into just one line.
4. Prepare a line chart of the book value each year for each method and a bar chart showing the
annual depreciation amounts. Appropriately size and place both charts into one page.
5. PDF page 3: Print both charts in Step 4 into one page. Provide proper heading, legends, and size.
6.
Change the cost of the machine to $500,000, and the salvage value to be 17% of the purchase
price as it is generally used in this industry, but keep the expected useful life still at 10 years.
Compute the depreciation expenses and book values again using the three depreciation methods.
7. PDF page 4: Print cells A8:H20 into one page with proper format.
Transcribed Image Text:COST
SALVAGE
LIFE
300000
50000
10
The Masters Corporation
Depreciation Analysis
Yearly Depreciation
PERIOD DOUBLE D STRAIGHT SUM YRS
1
2
3
4
5
6
7
8
9
10
PERIOD
0
1
2
3
4
5
6
7
8
9
10
BV DD
300000
Book Value
BV SL BV SYD
300000
300000
SALVAGE
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