practical 3: ms excel depreciation and logical functions gopalan vivek [email protected]

Practical 3: MS Excel depreciation and Logical functions

Gopalan Vivek

[email protected]

ObjectivesLogical functions

– AND– OR– NOT

Depreciation functions– DB (Fixed Declining Balance Method) – DDB (Double Declining Balance Method)– SLN (Straight line Declining Method)– VDB (Variable Declining Balance method)– SYN (sum-of-years' digits depreciation)

Complete questions in Practical 3 given below http://chaos.nus.edu.sg/Teaching/SCC2301/Practicals/practical_3.html

Logical Functions AND

– returns true if ALL its arguments are true OR

– returns true if ANY of its arguments is true NOT

– Reverses the value of its argument

Eg. NOT(false) returns true

Check the help for Logical functions in Excel for more details

B C D E F G

2

3 A B A and B A or B not A not B4 TRUE TRUE TRUE TRUE FALSE FALSE

5 TRUE FALSE FALSE TRUE FALSE TRUE

6 FALSE TRUE FALSE TRUE TRUE FALSE

7 FALSE TRUE FALSE TRUE TRUE FALSE

8 FALSE FALSE FALSE FALSE TRUE TRUE

Truth Table

D8=AND(B8,C8)E8=OR(B8,C8)F8=NOT(B8)G8=NOT(C8)

Example

Now solve the question 1 in the practical 3

http://chaos.nus.edu.sg/Teaching/SCC2301/Practicals/practical_3.html

Depreciation -definitions A decline in the value of a property due to

general wear and tear or obsolescence Method of writing off wear and tear on

assets that are used to produce income. Amount of value that a possession loses

over time.

Example

4 factors required for depreciation calculations

1. Cost Net purchase price. All reasonable and necessary expenditures to get the asset in

place and ready for use.

2. Residual Value (Salvage or Scrap Value) – Asset value at the end of its expected “useful life”.

3. Depreciable Cost Cost less residual value. Depreciable cost is allocated over the useful life of an

asset.

4. Life useful life period of the asset

What property may be depreciated?

“Depreciable property” must meet the following qualifications: – It must be used in a trade or business or held for

the production of income.– It must have a useful life of more than one year– It must wear out or lose value over time– It must be fully installed and in use to support

revenue generation. (A depreciable asset is not only acquired for use to support of earning profit, it must be in use, and not just owned by a business.)

http://www.fixedassetinfo.com/

Depreciation Methods

Straight-line Method Accelerated Methods

– Declining balance method– Sum-of-the-years digits

Production or Use Methods

Cost - Residual Value Estimated Useful Life

Straight Line Method This method spreads the depreciable costs

evenly over the asset’s estimated useful life. Annual depreciation is computed as follows:

$10,000 - $1000 5 years

= = $1800 / year

Check the help for SLN function in Excel for more details

B C D E F

2 Depreciation Schedule3 Straight Line Method - SLN function45 Scrap Value - 10006 Years - 578

9period yrs Cost

Annual Depreciation

Accumulated Depreciation

Carrying Value

10 DOP 0 10000 0 0 1000011 End of Yr 1 1 10000 1800 1800 820012 End of Yr 2 2 10000 1800 3600 640013 End of Yr 3 3 10000 1800 5400 460014 End of Yr 4 4 10000 1800 7200 280015 End of Yr 5 5 10000 1800 9000 1000

Same Increases Decreases Stop ateach Uniformly Uniformly Residual Valueyear

Carrying Value(CV) = Cost – Accumulated Depreciation

=D10-F10

=SLN(D11,$D$5,$D$6)

Decling-Balance Method

Results in relatively large amounts of depreciation in the early years of an asset’s life and smaller amounts in later years.

Is an accelerated method. Assumes that plant assets are most

efficient when new.

Decling-Balance(DB) Method -Type

1. Fixed DB method– computes depreciation at a fixed rate.

2. Double DB method– computes depreciation at an accelerated rate.

3. Variable DB method– Also computes depreciation at an accelerated

rate.– switches to straight-line depreciation when

depreciation is greater than the declining balance calculation

Check the help for DB, DDB and VDB functions in Excel for more details

B C D E F

2 Depreciation Schedule3 Fixed Decling Method - DB function45 Scrap Value - 10006 Years - 578

9period yrs Cost

Annual Depreciation


Carrying Value


Increases Decreases Can't go Quickly Quickly below scrap

Value


=D10-F10

=DB(D11,$D$5,$D$6,C11)

B C D E F

2 Depreciation Schedule3 Accelerated Double Decling Method - DDB function45 Scrap Value - 10006 Years - 578

9period yrs Cost

Annual Depreciation


Carrying Value


Increases Decreases Can't go Quickly Quickly below scrap

Value


=D10-F10

=DDB(D11,$D$5,$D$6,C11)

Summary - depreciation

VDB Variable-decling balance

http://www.umanitoba.ca/afs/agric_economics/course/061.046/assign/Lab04.pdf

B C D E F

2 Depreciation Schedule3 Formulae

4 Asset - Equipment C12 =SLN($D$5,$D$6,$D$7)

5 Cost 100,000 D12=DB($D$5,$D$6,$D$7,B12)

6 Scrap Value - 2000 E12=DDB($D$5,$D$6,$D$7,B12)

7 Years - 5 F12=VDB($D$5,$D$6,$D$7,B11,B12)8 D20=D19-C11

9 Depreciation Amt.

10 Years SLN DB DDB VDB

11 1 19,600 54,300 40,000 40,00012 2 19,600 24,815 24,000 24,00013 3 19,600 11,341 14,400 14,40014 4 19,600 5,183 8,640 9,80015 5 19,600 2,368 5,184 9,8001617 Value of Asset18 period yrs SLN DB DDB VDB

19 DOP 0 100,000 100,000 100,000 100,00020 End of Yr 1 1 80,400 45,700 60,000 60,000 21 End of Yr 2 2 60,800 20,885 36,000 36,000 22 End of Yr 3 3 41,200 9,544 21,600 21,600 23 End of Yr 4 4 21,600 4,362 12,960 11,800 24 End of Yr 5 5 2,000 1,993 7,776 2,000

Asset value vs Life time

0

20,000

40,000

60,000

80,000

100,000

120,000

0 1 2 3 4 5 6

Period (years)

As

se

t V

alu

e

SLN

DBDDB

VDB

Depreciation Vs Period

-

10,000

20,000

30,000

40,000

50,000

60,000

0 1 2 3 4 5 6

Period (years)

De

pre

ciat

ion

Am

t

SLNDBDDBVDB

Now solve the question 2 in the practical 3


Solve the Portfolio question in the practical 3 and submit your answers


practical 3: ms excel depreciation and logical functions gopalan vivek [email protected]

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