Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 28

Use the appropriate function in Excel to calculate the annual straight-line (SL) depreciation charge for an asset that has a $10,000 acquisition cost, a salvage value of $500, and a useful life of four years.

Step 1 of 2

Depreciation expenses are the expenses of using the asset during a period. It is an expense that does not include cash. There is no cash outlay when the future value of it is calculated. Depreciation expenses indirectly affect cash flow. The amount of depreciation reduces cash flow for income tax payment.