 to the 50% which you could double underline and say that's the bottom line number. So there's a different kinds of formats you could do that. If you did not have the borders around the squares you can use the double underlined this way which is pretty effective if you don't have borders being used. So keep that in mind just personal types of formatting that you may want to look into as you go. Now that we finally have that though we can now calculate the double declining depreciation for each year. So we're going to start off with year one. Year one's really simple once we have the double declining rate. We're just going to take the cost now and we're going to multiply it times 257.5 and I'm sorry we're going to take the cost which is 257.5 then we're going to multiply it times the double declining rate. And what is the double declining rate? It equals I'm just going to say equals is that 50%. That is the double declining rate. Once again if it's not even note that you could have a rounding error. So if it was something like one-third or something like that then you want to take the calculation of one divided by three meaning this cell divided by this cell so that the rounding will be in the calculation even though it'll show a number that is rounded it will use Excel will use the real number which is one-third if that were the case. Alright so then I'm going to go down here and that will give us the depreciation. So this will equal depreciation for year one. I'm going to say this equals the 257.5 times the 50% and enter that will give us the depreciation for year one. If we were then to plug that into our worksheet up here we can see that the depreciation would then be for year one equal to this amount that we just calculated the 128.750. If we wanted to calculate them and note just first off that that is far different that's twice as much as the depreciation or it's not twice as much it's it would be twice as much if there was no salvage value but it's far higher of course than the depreciation for the straight line method. So then we're going to go down here and we're going to calculate the book value which starts with the cost and the cost is this 257.5 same as straight line then the accumulated depreciation because this is the only year that we've have done so far the accumulated depreciation is that to 128.750 how do we calculate book value it's going to equal the cost I'm going to point to it minus the accumulated depreciation I'm going to point to it and enter. So there's our calculations that this is what a normal problem will ask you is a depreciation they could ask you they could ask you what the accumulated depreciation is they could ask you to calculate the book value. The book value happens to be the same as the depreciation and the accumulated depreciation why because we had a 50% depreciation in this year therefore we that's that's going to be half of the thing was depreciated the equipment was depreciated in year one if we look at it in terms of a journal entry now remember that the first accounting class kind of told us in the adjusting entry process what this number was and then had us post it so if we look at the context of year one basically what now what we have now is the equipment on the books at the 257.5 and we have no accumulated depreciation and no depreciation expense we're showing net income in this case I'm of 100,000 and we're saying that we have revenue of 100,000 no expenses so this is net income as of this time it's not a loss that's income it's a credit represented by brackets in this format of the worksheet now in order to do the adjusting entry we're going to have one balance sheet account above the equity section one income statement account generally below the equity section the income statement account is going to be depreciation of course and expense expenses only go one way they go up therefore we're going to debit the expense because expenses have debit balances we're going to make it go up by doing the same thing and the amount we now know will be this 128 750 so then we're going to credit something for the same amount credit 128 750 I'm going to represent credits with a bracketed or negative numbers for the purposes of this worksheet if we see that then we now see that we have the equipment on the books for 257.5 we see that it's an asset in the green area and we see that we have this other of course accumulated depreciation that which is abbreviated which is a contra asset account meaning it's an asset account that has a credit balance which is contra to normal asset accounts and if we take the debit minus the credit we have the 128 750 which is the book value then we recorded the depreciation expense on the income statement we can see that revenue of 100 minus the 128 750 means we have a loss this is meaning we're losing money because of the fact that we depreciated 50 percent of this large piece of equipment in this year so as opposed to under the straight line method where we had income of 40 this method we have a loss because of this substantial difference in the expenses it's a timing difference meaning that we're going to expense more in the first year than in the last year we'll see how that works out as we go note that if near two we can see what's going to happen we're set up for year two meaning that the entire income statement is now closed out to the capital account and so this amount means that we have nothing in depreciation yet until we record it we're going to assume that we have the same hundred thousand that we earned in year two exactly the same revenue earnings and we're going to start off at this point in time in terms of the equipment and the accumulated depreciation which does not zero out notice that these two accounts are permanent and we'll record the depreciation for the second year all right we're going to go down to year two we're going to record the depreciation for year two we're going to start off with the same thing we start with cost and the cost is still going to be this 257 five that has not changed and then i'm i'm going to give us the less depreciation for for year one or less the accumulated depreciation up until this time so that's everything that's happened accumulated before year two so in this case the accumulated depreciation is just the year's one depreciation expense that's all we have so far so that's going to give us the book value before this year so we're going to do this calculation here i'm going to say this equals the 257 five minus the book value prior to this year before the depreciation is calculated for this year again we could do it some underlines here i know i'm not doing this all the way through but i'm going to underline here and we could have done an underline here and we could say that this is the bottom lines i could double underline that and indicate that that's the end result that's the end result we wanted to see for that particular calculation all right so then we're in year two we're going to then multiply that times the double declining rate and the double declining rate does not change it's still the 50 so we're going to take that 50 and multiply that out and that will give us the depreciation for year two so we'll do this calculation i'm going to say this equals once again the book value before this year's depreciation is recorded times the 50 percent double declining rate will give us then the depreciation for year two so then if we look at that in our little worksheet up here our worksheet worksheet we're going to say depreciation for year two now is different from year one it's going to be far less it's going to be the 64 375 and so we we're front loading the depreciation in this case so more depreciation in the beginning years less in the later years and we're going to say the cost we're going to calculate the book value now the cost is going to be equal to the same as it was in the prior year doesn't change that's what we bought it for accumulated depreciation now is going to be the prior year's accumulated depreciation plus the cumulative depreciation we just posted for this year that will give us the total depreciation we can also think of it as it's this plus this it's depreciation up until this point in time being this 193 125 how do you calculate the book value equals the cost less the accumulated depreciation and there's the book value if we think about this in terms of the journal entry then once again they just gave us the book value now so we have this book value here and we have the depreciation number that we will then use in order to calculate this number so same journal entry we're going to debit depreciation expense by the 64 375 that will record in year two the depreciation down here so there we have that then we're going to record the accumulated depreciation i'm going to make it a negative for this worksheet of this number once i hit enter it will record this accumulated depreciation here up to our accumulated depreciation on the worksheet and there's what we have here so notice that in year two the depreciation expense is only 64 375 whereas it was 128 750 the accumulated depreciation is 193 to 125 you might be saying well why are these two different why shouldn't they be equal and opposite if the journal entry is recording an equal amount equal and opposite amount of equal amount of debits in the case of the depreciation and equal amount of credits in the case of accumulated depreciation to these accounts and the reason is because these income statement accounts are temporary and got rolled over into the capital account therefore if we assume that we accumulated the same 100 000 not the same as this year but we just performed the same in year two then the depreciation expense is going to be what it is for year two which is less than of course uh what it was in year one therefore we now have net income this number is better than this number this is income represented by the 100 000 income less than 64 375 and uh therefore that's what we have notice the comparison between the two years up in the straight line method okay so the book value can be calculated as net income or the cost less to accumulate depreciation 64 375 matches our 64 375 over here let's continue to year three so year three we are down here we'll do a similar type of calculation we're going to start off once again with the cost and the cost is the same as it always is that's what we bought it for and there we have it i can also double underline this real quick double underline that and then i'm going to put an underline here whoop not that one this one and there we have that okay and then we're going to say less the depreciation i should say less the accumulated depreciation prior to the current year up to this point the depreciation i could calculate a couple different ways i could say well that equals the depreciation expense for year one it also equals the depreciation expense for year two so those two added up would be the accumulated depreciation prior to the accumulated depreciation or the depreciation