Straight Line Depreciation Method
Straight Line Depreciation Method
The simplest and most commonly used depreciation method, straight line depreciation is calculated by taking the purchase or acquisition price of an asset subtracted by the salvage value divided by the total productive years the asset can be reasonably expected to benefit the company (called “useful life” in accounting jargon).
Straight Line Depreciation Calculation
(Purchase Price of Asset – Approximate Salvage Value) ÷ Estimated Useful Life of Asset
Declining Balance Method
A way of calculating the depreciation of an asset whereby one subtracts a certain percentage of its current value each year. For example, suppose an asset costing \$100,000 depreciates 10% each year. After the first year, it depreciates to \$90,000. In the second year, one deducts 10% from the \$90,000, rather than the original \$100,000. Thus, the depreciated value after the second year is \$81,000. This is a common means of calculating depreciation.
Sum of Years’ Digits Method
an accelerated method of depreciation which is also based on the assumption that the loss in the value of the fixed asset will be greater during the earlier years and will go on decreasing gradually with the decrease in the life of such asset. The SYD is found by estimating an asset’s useful life in years, then assessing consecutive numbers to each year, and totaling these numbers. For n years:
SYD = 1 + 2 + 3 + 4 + …… + n
First year depreciation = 5/15 × Depreciation cost
Second year depreciation = 4/15 × Depreciation cost
Third year depreciation = 3/15 × Depreciation cost
Fourth year depreciation = 2/15 × Depreciation cost
Fifth year depreciation = 1/15 × Depreciation cost
MARCS Method (Modified Accelerated Cost Recovery System)
For tax purposes, the MACRS method should be used. According to the IRS, the two most common asset classes besides real estate are the five-year and the seven-year asset class. Asset classes are similar types of assets grouped together. The five-year asset class includes automobiles and light-duty trucks, while the seven-year class includes most machinery and equipment, which means that all automobiles and light-duty trucks should be depreciated for five years, and most machinery and equipment should be depreciated for seven years. When using the MACRS method, the residual value is ignored. All fixed assets are assumed to be put in and taken out of service in the middle of the year. Therefore, for the five-year class assets, depreciation is spread over six years. The depreciation rates for the five-year class are as follows:
Year 1—20.0%
Year 2—32.0
Year 3—19.2
Year 4—11.5
Year 5—11.5
Year 6—5.8
Credit Union
an alternative to a bank. It is a cooperative financial institution, owned and controlled by the people who use its services. The people who use a credit union are its members and they have something in common such as where they work, live, or attend church. Because credit unions are not-for-profit, they provide better rates and fees than banks. At a credit union, a savings account is sometimes called a share account and a checking account is a share draft account.
Bank Services
apply for a credit card
cash a check
deposit money
exchange money
fill out a withdraw slip
open a checking account
open a savings account
order checks
pay off a loan
rent a safety deposit box
take out a loan
talk with a bank teller
talk with the bank manager
transfer money
use a debit card
withdraw money
Reconcile a Bank Statement
Balance per Bank Statement = Balance per Books

Bank Statement + Deposits in Transit – Outstanding Checks +- Bank errors = Balance per Bank

Books – Bank Service Charges – NSF Checks & Fees – Check Printing Charges + Interest Earned + Note Receivable +/- Errors = Balance per Books

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