The declining balance method of calculating depreciation enables companies to accelerate the rate at which they claim the tax benefits inherent in asset depreciation. As the name implies, the double declining balance depreciation method doubles the rate at which the declining balance method calculates an asset’s depreciation.
- [Instructor] In the previous movie,…I described the declining balance method…of calculating depreciation,…which enables companies to accelerate the rate…at which they claim the tax benefits inherent…in asset depreciation.…As the name implies, the double declining balance…depreciation method, doubles the rate…at which the declining balance method…calculates an asset's depreciation.…In this movie, I will show you how to use…the double declining balance depreciation method.…My sample file is DoubleDeclining_O2_O3…and you can find it in the Chapter Two folder…of your exercise files collection.…
In this case, my item to be purchased is an office building.…The initial cost of the building is 25 million dollars.…and we're assuming that we'll be able to sell it…for two million dollars at the end of its economic life…of 30 years.…What I want to do is calculate the yearly depreciation…for the first ten years of that items economic life.…So I have all the information I need.…I'll click in cell E6, which is the first cell…
- 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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