THIS ASSIGNMENT SHOULD HAVE AN EXCEL SPREADSHEET AND WORD FILE WHEN COMPLETED!
Create a graph in EXCEL comparing the results of the three methods below with book value on the Y-Axis and year on the X-Axis:
1. A company purchases a truck for $110,000. The truck has an estimated salvage value of $10,000 at the end of the recovery period. Using Microsoft Excel, prepare a depreciation schedule for the truck using the straight line method with a recovery period of five years.
2. A company purchases a truck for $110,000. The truck has an estimated salvage value of $10,000 at the end of the recovery period. Using Microsoft Excel prepare a depreciation schedule for the truck using the sum of year method with a recovery period of five years.
3. A company purchases a truck for $110,000. The truck has an estimated salvage value of $10,000 at the end of the recovery period. Using Microsoft Excel prepare a depreciation schedule for the truck using the 200% declining-balance method with a recovery period of five years.
After graphing the results of the three methods write a brief set of instructions on how you created your graph in Excel and respond to the following questions in a WORD document:
1. Which method results in more depreciation in each year? Less depreciation each year?
2. Although we have not covered the details of the accounting/ tax implications of using an accelerated depreciation method, why might you want to use an accelerated depreciation method?
3. How much was the actual cash amount that was transferred due to depreciation? Think carefully about this question.
