Difference in DB Depreciation answers

[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.