Depreciation Compare Tool: Straight Line vs. Double-Declining Balance
Originally published: 01/07/2019 18:09
Last version published: 01/07/2019 18:12
Publication number: ELQ-90325-2
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Depreciation Compare Tool: Straight Line vs. Double-Declining Balance

Compare the two main types of depreciation as well as see a schedule that runs up to 30 years.

Description
There are two main parts to this excel tool. Both involve displaying the depreciation expense and book value over time.

Part 1 involves aggregating up to 95 different fixed assets all into a monthly and annual summary that shows the actual depreciation expense and book value over time. This part uses the straight line method only.

The main inputs for each fixed asset include: purchase price, salvage value, date of purchase, and useful life. Based on those things, all the needed summaries automatically fill in.

The reason this is important is because depreciation expense is vital to reducing your taxable income. Also, it is important to understand the fact that you can't deduct the cost of a fixed asset all at one time (unless you meet certain criteria). Speaking of such criteria, this model does not look at section 179 factors.

Part 2 is the comparative analysis. This will let the user see the monthly and annual depreciation over 15 years of a single asset. It compares those values for straight line depreciation and double declining balance so you can see how they differ and the logic that goes into their calculations.

Part 2 also includes two charts that display a comparison of the monthly depreciation expense of each and the book value over the useful life.

Note, this is not financial advise. Use at your own risk.

This Best Practice includes
1 Excel template

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Further information

See the logic behind depreciation expense calculations.

When you have multiple fixed assets.

If you use a depreciation method other than straight line or double declining balance.

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