Question

1. Describe the shape of the three lines in a depreciation comparison chart depicting straight-line, double declining balance, and sum-of-the-year’s digits depreciation.
2. What is the purpose of the depreciation summary?
3. Discuss the different steps in a partial year depreciation calculation versus a full year.
4. How do you add a new series of data to an existing chart.

Answer 1

a. Describe the shape of the three lines in a depreciation comparison chart depicting straight-line, double declining balance, and sum-of-the-year’s digits depreciation.

The straight line depreciation is a straight line through the years, the double declining balance line curves downward and then slowly flattens out over the years and the sum of the year’s digits line has a negative slope that is constant over the years

b. What is the purpose of the depreciation summary?

The depreciation summary shows all costs, depreciation, and accumulated depreciation from similar assets to help the preparation of financial statements on an annual basis. This helps to provide data for asimilar asset to support the financial statement.

c. Discuss the different steps in a partial year depreciation calculation versus a full year.

When a plant asset is acquired during the year, depreciation is calculated for the fraction of the year the asset is owned. Example: How would you calculate a partial year of depreciation using the Straight Line Method if you purchased a company car on March 30, 2017. Straight Line Depreciation = (Purchase Price of Asset - Approximate Salvage Value) ÷ Estimated Useful Life of Asset × (9/12) months

d. How do you add a new series of data to an existing chart?

You can add a new series of data to an existing chart by selecting the chart and in the Design tab, you click Select Data in the Data Group. You then click Add under the Legend Entries (Series) section and then in the Series values box, you clear it out and choose the data you would like to add.