The most straightforward method you can use to calculate depreciation is to use the straight-line method. As the name implies, the straight-line method assigns depreciation evenly over the economic life of the asset. The starting amount is the asset’s purchase price, and the ending value is the asset’s salvage value. To calculate straight-line depreciation, you use the SLN function.
- [Voiceover] Anytime you purchase or build…any sort of physical asset for your business,…that could be a factory building,…it could be a computer or anything else…that wears out over time, you can claim depreciation.…The specific type of depreciation that you claim…depends on how you're using it.…Tax authorities allow you to depreciation items…at an accelerated rate for a greater tax benefit,…which also encourages investment,…or if you're doing a financial reporting…for stockholders and the government,…then, you need to use different methods.…
And one of those methods is called…straight line depreciation.…In this movie I will show you how to calculate…straight line depreciation.…My sample file is Straightline_02_01…and you can find it in the chapter two folder…of the exercise files collection.…As the name implies, a straight line depreciation…keeps a constant rate of depreciation for your asset.…For example, let's say that you buy a computer…for $1,300 and it has an economic life of five years…and at the end, you'll be able to sell it,…
- Define NPER.
- Determine the appropriate method of depreciation to use on tax returns.
- Recall which function is used to evaluate a fixed-rate investment or an annuity that makes periodic payments to the beneficiary.
- Identify the term for the rate of return earned from a zero-risk investment.
- Explain the purpose of the XNPV function.
- Recognize the type of bond that pays interest before it matures.
- Name three arguments needed to use the TBILLYIELD function.
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. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 24s
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