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In the last lecture, we have seen different methods of depreciation in this lecture, we will learn

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how to implement those depreciation techniques in Excel.

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Now we have discussed in-depth theory on how to calculate depreciation values for all these methods,

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but there is no need to perform all those calculations in Excel, Excel, provide US and formula to

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calculate depreciation for all of these three methods.

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So first, we are going to discuss a straight line depreciation, then we are going to discuss the decline

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balance depreciation method and at last we are going to discuss some of year's budget depreciation metall.

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So here is our case, the asset value is one hundred thousand, the salvage value at the end of five

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year is only 10000.

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So we have to appreciate this asset for five years.

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First, let's discuss about Straight-line matter, so the formula for calculating a straight line depreciation

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is as L and.

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You need to give three parameters, the first one is the cost and cost, you have to give the purchase

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value or the original value of your asset, which is this.

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Then the second parameter is salvage value.

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In our case, the salvage value is thousand.

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If salvage value is not given, then you have to consider zero as your salvage value and you can just

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zero over here.

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And the third parameter, you have to give the life of the product, and in our case, the life is five

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years.

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So we will select this.

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Now, if you hit, enter.

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You will get the depreciation value.

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Now, since we are using a straight line method, this depreciation value will be gone, spent for all

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the five years.

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So we can expand this formula to our next sales as well.

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But before expanding, let's fix the referencing of all the cells that we are using in this formula.

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In that way, if we expand the formula, these cells are not going to change.

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So the shortcut for absolute representing is EFORE.

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So just select all the cells you want to fix and then just press F4 and you will find other symbols

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in front of raw numbers and call them names.

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So after using absolute referencing, we can expand this formula.

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So you can see that we are getting the same value of 18000 and all the five years, and just to check

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whether the cell referencing is working fine, so just select any of the cells below and click on this.

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The and you can see that the cell referencing is working fine and we are selecting the correct cells.

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So in a straight line, we are getting 18000 as depreciation value for all the five years, so you can

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add depreciation value of eighteen thousand for all the PNL statements of five years.

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Now, the second method is.

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Double declining balance.

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And here the formalized BTB.

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Just right, Debbie.

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So here there are four parameters.

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The first three parameters are the same as the parameters for the straight line method and for the last

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parameter, we have a period in which we have to mention the period for which we want to calculate the

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depreciation amount.

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This parameter was not needed in SLN matter because in SLN method, the depreciation amount remained

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the same for all the periods.

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So the first parameter is cost, which is the actual value.

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Then the second parameter is salvage value, which is this.

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The third parameter is life of the asset, which is this.

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And then the last parameter is this period parameter.

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If we enter, we will get the depreciation amount.

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So in the world climbing method, we are getting the precision of around 40000 and Bédard, one known

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here, also we can expand this formula.

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But before that, we need to fix the cell referencing.

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And you can see that we want this C9 cell to be changed when we are dragging the formula.

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So for the second cell, we want it to be two.

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For the third cell, we want to be three and so on till the bitter end, equal to five.

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So in this formula, we will fix C3, C4 and C5 cells on the.

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So just select and preserve for now, once you have fixed yourself referencing, you can drag this formula

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down to a plate and rest of the cells.

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So you can clearly see the difference between the declining balance and the straight line matter and

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the straight line, I thought we were getting a constant appreciation value for all the five years and

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in the world climbing, you can see that for the first few years the depreciation amount is larger than

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our straight line mattered.

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And for the rest of remaining years, the depreciation amount is less than our straight line return.

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The declining balance also points for salvage value.

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So in our case, our actual value was hundred thousand, salvage value was 10000.

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So we are depreciating our asset by around 90000.

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So the sum of all these values should be 90000.

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You can see that the some of depreciating values is ninety thousand, we can apply the same thing in

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a straight line matter also, and we will get the same result in a straight line method as well.

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So both of these matters are accounting for salvage value.

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The next method is some of your digicam.

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We already discussed the theory behind it.

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Now let's apply it and excel, the formula here is as widely.

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So we can ride equal to Suadi.

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And then we have the same parameters.

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First, we have the cost, which is the actual cost.

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Second, we have the salvage value, which is this third, we have the life of the asset, which is

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this, and then we have to mention the period and the last parameter.

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So just like the world reclaiming.

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We need to give Ford parameters.

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So in some of it didn't matter for the first year, we are getting 30000 as our depreciation amount

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for this asset.

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Now, before extending this formula to other rules, let's the referencing of SI three, four and see

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five said.

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We are not using absolutely flensing on CNN because we want.

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This cell to be changed when we are expanding the formula, let's expand no.

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So you can see that and some of your budget might as well, the deposition amount is declaiming with

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each year.

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Now, let's calculate the sum of.

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All this debris shifting the position amount and you can see that we are depreciating our asset by 90000.

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So at the end of 50, it will get 10000 as our salvage value.

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So that's how we apply the appreciation and excel.

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There is no need to calculate it manually in Excel, you can just use these three formulas to calculate

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depreciation amount according to your depreciation logic.