Learning Objectives – Class 6
After today’s lecture, and after working the homework problems, the student should be able to
- Work problems involving straight-line depreciation
- Work problems involving sum-of-the-year’s-digits depreciation
- Work problems involving declining balance depreciation
- Explain under what conditions depreciation is important
- Explain what is depreciable, and what is not
- Explain when salvage value is used in depreciation, and when it can be omitted
- Explain which method of depreciation is most advantageous to a business
Topics covered in today’s class
- Straight-Line Depreciation – need cost, life, salvage
- Sum-of-the-Year’s-Digits Depreciation – need cost, life, salvage
- 200% Declining Balance Depreciation – need cost, life, salvage (see example here)
- 150% Declining Balance Depreciation – need cost, life, salvage
- MACRS depreciation – need cost, no life, no salvage and can go below salvage