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Depreciation: Building a Depreciation Schedule

College-Cram.com:: Accounting:: Depreciation:: Building a Depreciation Schedule
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Description: Knowing the different methods of calculating depreciation isn't enough for an accountant, you also need to create a depreciation schedule. Here's how you do it.
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Contents

  1. Introduction
  2. File: Depreciation Schedule Spreadsheet
  3. Choose a depreciation method
  4. Calculate your first year's depreciation
  5. Calculate the remaining years' depreciation

Introduction

Building a depreciation schedule is a multi-step process, but is not as difficult as it may seem.

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File: Depreciation Schedule Spreadsheet

You can use a spreadsheet program to create a depreciation schedule that calculates the annual depreciation for you, but for instructional purposes we'll use this one below.
Thumbnail
Title: Depreciation Schedule Spreadsheet
Description: Use this spreadsheet with our depreciation Cramlets to create a depreciation schedule.
Keywords: accounting, depreciation, depreciation schedule, spreadsheet
Size: 68608 bytes
Original filename: Depreciation Schedule.xls
Imported at: 18/09/2007 10:49 CDT
The original file this was imported from is here.

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Choose a depreciation method

You have several things to consider when selecting a depreciation method. Are there company guidelines you must follow? How about government regulations that dictate the method to use? How will the asset be used, and how quickly will it get used up? Do you need an accelerated method?

Use this Depreciation Consultant to help you decide which method is best.

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Calculate your first year's depreciation

Now that you've selected your depreciation method, launch the corresponding Formula Solver from the list below:

Plug in the appropriate numbers for asset price, salvage value, etc. and find the depreciation amount for the first year. Put that number in cell D4 of your spreadsheet (the year 1 depreciation amount) and the original asset price in cell C1 (start-of-year book value).

The accumulated depreciation and end-of-year book values will auto-calculate.

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Calculate the remaining years' depreciation

In your Formula Solver, change the number in the "current value" field to the end-of-year book value from your spreadsheet and click the Next button. The Formula Solver will recalculate the depreciation for you -- put this new number in the next year's Depreciation Amount cell on your spreadsheet.

(Note: If you are using the straight line depreciation method, you can forget this part -- just copy down the same depreciation amount for as many years as the asset is being depreciated. That's what straight line is, averaging the depreciation equally over the years. If you are using the sum of the years' digits depreciation method, change the "year in question" field instead.)

Repeat as needed for the balance of the years. 

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