The declining balance and double declining balance methods let you capture most of an asset’s depreciation early in its economic life. These aggressive depreciation schedules generate huge tax offsets in the first few years. Using a variable declining balance approach mixes declining balance and straight line strategies to capture more of the benefits toward the end of the asset’s life.
- The declining balance and double declining balance methods…let you capture most of an asset's depreciation…early in its economic life.…For a building, which has a useful life of 30 years,…these aggressive depreciation schedules…generate huge tax offsets in the first few years.…The downside of this type of schedule is that…you get to offset almost no depreciation…toward the end of an asset's economic life.…Using a variable declining balance approach makes this…declining balance and straight line strategies…to capture more of the benefits…towards the end of an asset's life.…
I will show you how to use…the variable declining balance method in this movie.…My sample file is variable declining balance oh two oh five,…and you can find it in the chapter two folder…of your exercise files collection.…The goal of the variable declining balance method…is to capture as much depreciation as you can…at the start but then, when the…level of depreciation per year reaches…what would be straight line depreciation,…then you start using that method.…
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- Recall what the type argument is used to determine when using the PMT function.
- Identify what the M stands for in the ACCRINTM function.
- Name the accounting rules used by the AMORDEGRC function to assign a depreciation coefficient to an asset.
- Recall what internal rate of return generated by the IRR function should be measured against to determine if it is a good investment.
- List the three regular intervals that coupon bonds pay interest at.
- Determine the function that provides a more conservative bond evaluation compared to the DURATION function.
- Explain what the RECEIVED function shows.
Skill Level Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Analyzing Simulation Results
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