MBA's Guide to Microsoft Excel

Financial accounting standards and tax accounting laws require that you depreciate an asset in the process of calculating profits. Methods and conventions for doing this vary depending on the asset, the industry, and the party to whom profits are reported. The pur- pose, however, remains the same: to allocate the cost of the asset over the years it will be used.

The five asset depreciation starter workbooks, described in this chapter, automate the prepa- ration of asset depreciation schedules and provide foundations for customizing deprecia- tion schedules. These starter workbooks (and the depreciation convention each uses) are as follows:

• STRAIGHT.XLS (straight-line)

• DECLIN’G.XLS (declining balance)

• SUMYEARS.XLS (sum-of-the-years’-digits)

• ANNUITY.XLS (annuity or sinking fund)

• ACTIVITY.XLS (activity)

Chapter Contents:

• EasyRefresher: Asset Depreciation
• Using the Asset Depreciation Starter Workbooks
• Understanding the Straight-Line Depreciation Starter Workbook
• Understanding the Declining Balance Depreciation Starter Workbook
• Understanding the Sum-of-the-Years’-Digits Depreciation Starter Workbook
• Understanding the Annuity or Sinking Fund Depreciation Starter Workbook
• Understanding the Activity Depreciation Starter Workbook
• Customizing the Asset Depreciation Starter Workbooks