Difference in DB Depreciation answers

[Carsen]

The HP Prime gives a different answer for following declining-balance depreciation problem when compared to the HP-12C. The problem is on page 141 of the HP-12C user's guide, except I'm using a factor of 200% instead of 150% . Here are the problem's variables...

Cost = $50,000
Salvage = $8,000
Useful Life = 6 years
Factor = 200%
First Used in the beginning of September.

The Prime and 12C give similar answers for depreciation and the remaining depreciation for years 1, 2, 3, & 4. Years 5 and 6 are when the answers are way off. This is the answers each calculator provides for the depreciation for that year.

Year 5:
12C=4,389.57
Prime=3,917.70

Year 6:
12C=779.15
Prime=1,251.03

My Prime has the latest firmware and I have checked what I have entered into my calculators more than twice. I even re-entered my partial year declining-balance depreciation program into my 12C. I always doubt the user before I begin to suspect the calculator. So this means there is no input error. What do you all think is going on?

[roadrunner]

If you use DB with SL crossover:

   

You get the same answer as the 12c for years 5 and 6:

   

[Tim Wessman]

So the next question... is the SL crossover what the 12C is doing nomrally or is Prime calculating the wrong one for the setting?

[roadrunner]

I don't know, but calculator soup here:

https://www.calculatorsoup.com/calculato...alance.php

gives the same answer as the prime using sl crossover:

   

[Carsen]

For this particular problem, it seems that both declining balance and declining balance with straight line crossover have the same answers. This will why the Prime yields the same answer as the partial declining balance program on the 12C

The 12C has two programs. The first one is a partial declining balance depreciation program that takes 37 steps total. The other program is declining balance with a Straight line crossover, which takes 95 steps. Both programs generate the same answers for the problem.

I wonder if there this is caused by my lack of knowledge about these depreciation types? I'll keep looking into it. Let me know if there is anything else you all find. Thanks

[cyrille de brébisson]

Hello,

Is the "First USe" set to 1 on Prime?

Cyrille

[Claudio L.]

(07-01-2018 11:36 AM)Tim Wessman Wrote:  So the next question... is the SL crossover what the 12C is doing nomrally or is Prime calculating the wrong one for the setting?

From the table roadrunner shows, there's no SL crossover happening:

Depreciation% = (1/Years)*Factor = 1/6*200/100 = 1/3

First Year:
DB = $50000*1/3 = $16666.67 for a full year, since it started in September (only 4 months out of 12):
DB = $16666.67 *4/12 = $5555.56 (in agreement with HP Prime)

Value = $50000 - 5555.56 = $44444.44

Now for the second row...
DB = $44444.44/3 = $14814.81
Value = $44444.44-$14814.81 = $29629.62

And so on. Basically this whole application merely computes the initial Depreciation% then does << DUP Depreciation% * - >> on each row.

Keep proceeding the same way and you'll find all the values in the table are correct. The last year you can only depreciate the difference you have left over those $8000 salvage value, hence only $779 and change.

Since the procedure didn't change, those results are consistent with no SL crossover.

To do it with SL crossover, at each row you compute how much the straight line depreciation would be with the years you have left. If it's more than the other method, then you switch to straight line for the rest of the years.

In this case:
First year, DB = (50000-8000)/6 = $7000 (since we got $16666.67, use the other method).
2nd year, DB = ($44444.44 - $8000)/5 = $7288.88 vs $14k and change, so keep using the other method
3rd year: DB = (29629.62-8000)/4 =$5407.41 vs $9876, stick to same method
and if you keep going, you'll find the straight line method is always less so there's no crossover happening.

Now if the Prime gives different results with and without SL crossover, there's something fishy going on.

[Carsen]

(07-02-2018 05:59 AM)cyrille de brébisson Wrote:  Is the "First USe" set to 1 on Prime?

Yes. When I come across an error with a calculator, I always doubt the user. Hence, I have triple checked all of my inputs. I put the number 9 into First Use to tell the calculator that the item was first used in the beginning of September.

(07-02-2018 01:42 PM)Claudio L. Wrote:  Now if the Prime gives different results with and without SL crossover, there's something fishy going on.

Pictures are worth a thousand words. So here is the pictures of my results using the declining balance.