Chapter 9, Problem 2R

Open the file DEPREC from the website for this book at cengagebrain.com. The formulas on this worksheet are somewhat complicated. Be sure to use cell references wherever possible in your formulas instead of numbers. You should find the year numbers in column B helpful for some of the formulas in columns C, D, and E. Your instructor may tell you whether you are to construct your own formulas or use =SLN and =DDB (see Appendix A of Excel Quick for an explanation of these functions). For example, FORMULA1 could be either =(D7–D8)/D9 or =SLN(D7, D8, D9). Assume that all assets acquired will have at least a three-year life. Note that all cells on the worksheet containing zeros have been preprogrammed to perform depreciation calculations.

Enter the formulas in the appropriate cells. Does your depreciation total $320,000 under all three methods? If not, correct your error. (Hint: If your double-declining-balance method is off, check cell E32 where FORMULA12 is located. It should include an =IF statement that will enter a modified calculation of depreciation if Year 4 is the last year of the assetʼs expected life. See Appendix A of Excel Quick for an explanation of the =IF function. Save the completed file as DEPREC2. Print the worksheet. Also print your formulas using landscape orientation and fit-to-1 page scaling. Check figure: DDB depreciation for Year 3 (cell E31), $43,750.