 # Accelerated Depreciation Method

Just read this example yet could not figure it out how does it get the number: Reading 37. p. 385-386 Original Cost = \$18,000 Salvage Value = \$3,000 Depreciable Life n = 5 By DDB method, what would be the Year 4 Depreciation Expense?

use your calculator, once you can use it these questions take about 3 seconds

Thx for the tip. I’ll search if there’re any related threads… Although calculator is a short-cut, I’m still interested in the thinking process.

Two ways of doing it: (1) work your calculator: (2nd) 4 (activate the depreciation worksheet), with: DB=200 LIF=5 M01=1 CST=18,000 SAL=3,000 YR=4 that results in a depreciation of 888 in year 4. (2) work your way out like a dog! Formula 2/5*Book value at the beginning of the year: Year 1: Depreciation: 18,000*2/5=7,200 Year 2: (18,000-7,200)*2/5= 4,320 Year 3: (18,000-7,200-4,320) = 2,592 At Year 4, the book value of the asset is 18,000-7,200-4,320 - 2,592= 3,888 Since the asset has a 3,000 salvage value, in year 4 only 3,888-3,000=888

Thx, map1. You are the best!!!

Are you f’in kiddin me, Ive been slaving over these damn calculations when I could punch it into the calculator and get the answer in 2 secs? LOL!!!

learning how to use this calculator is great, i understand that you should know the theory behind it as well, but for these questions knowing how to use the calculator is great.

I read the depreciation part of the manual and it’s quite easy to follow the instructions. However, it does not explain why DB default is set as 200? And what’s M01=1 and why always skip it? In terms of the method options, besides SL & SYD, there’re DB & DBX whose default values are both set as 200. I assume DB is for DDB and DBX is for other multiple depreciation method.

DB is double declining, so it goes 200, like 200% - double. M01 is the time during the year when depreciation starts. If you get into the depreciation at the very beginning of the year, then M01 = 1. If you buy the good in mid April, then the M01 would be 3.5 (as in, the mid of the fourth month). Don’t know what DBX is (as a method of depreciation) but start reading at page 59 in the calculator’s guide. I have the professional BA II plus from TI. http://education.ti.com/downloads/guidebooks/financial/baiipluspro/BAIIPLUSPROGuidebook_EN.pdf

Thx much, I guess that’s good enough for me to know at the moment. The link you showed gives a more thorough, detailed guidance than the quick reference I glanced over.

The document in the link is the official calculator guide, from the Texas Instruments website. Good to download if you need it for further reference.

Is this only for the ‘pro’ version of the TI calculator or can you do it on the std one?