Lesson ProgressPhase 4 of 6
Phase 4Independent Practice
Independent Practice: Method Comparison and Investor-Ready Summary
Build the real method comparison workbook with verification checkpoints and Definition of Done
🔨 Phase 4: Workbook Sprint
Build the Method Comparison Workbook
Open your Lesson 05 asset register workbook. Today you will add a Method Comparison sheet and a Statement Impact summary. By the end of class, your workbook should show SL and DDB side by side with verification checks.
unit08-lesson06-student.xlsx
If you do not have your Lesson 05 workbook, use this starter file which includes the asset register.
Build Block 1: Method Comparison Sheet
Add a new sheet called "Method Comparison" with one row per asset from your register.
| A | B | C | D | E | F | G | H | I | ||
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | A | B | C | D | E | F | G | H | I | |
| 2 | Method Comparison | |||||||||
| 3 | Row | Asset | Cost | Life | Salvage | SL Yr1 Exp | DDB Yr1 Exp | SL End BV | DDB End BV | Check |
| 4 | 3 | Delivery Van | 30000 | 5 | 5000 | 5000 | 12000 | 5000 | 5000 | OK |
| 5 | 4 | 3D Printer | 15000 | 4 | 1500 | 3375 | 7500 | 1500 | 1500 | OK |
| 6 | 5 | Server Rack | 8000 | 3 | 800 | 2400 | 5333 | 800 | 800 | OK |
| 7 | ||||||||||
| 8 | ||||||||||
| 9 | ||||||||||
| 10 |
Formula Guide
- SL Yr1 Exp:
=(Cost − Salvage) / Life— link from register columns - DDB Yr1 Exp:
=Cost × (2 / Life)— DDB uses full cost, not depreciable base - SL End BV: Should equal
Salvage— both methods end at the same value - DDB End BV: Should equal
Salvage— verify with your full DDB schedule - Check:
=IF(DDB_End_BV = Salvage, "OK", "ERROR")
Verification Checkpoint 1: All three assets show "OK" in the Check column. Both methods end at the same salvage value.
Build Block 2: DDB Full Schedule with Salvage Floor
Below the comparison table, build the full DDB schedule for one asset to verify the salvage floor works.
DDB Schedule Formula Pattern
- Year 1 Expense:
=Cost × (2 / Life) - Year 2+ Expense:
=MIN(Prior_BookValue × (2 / Life), Prior_BookValue − Salvage) - Accumulated Depreciation:
=Prior_AccumDep + Current_Expense - Book Value:
=Cost − AccumDep - Check:
=IF(BookValue = Cost − AccumDep, "OK", "ERROR")
Critical: The MIN formula enforces the salvage value floor. Without it, DDB can drive book value below salvage.
Verification Checkpoint 2: The final year's book value equals the salvage value exactly. The check column reads "OK".
Build Block 3: Statement Impact Summary
Add a summary section that shows how method choice affects financial statements.
| A | B | C | D | ||
|---|---|---|---|---|---|
| 1 | A | B | C | D | |
| 2 | Statement Impact Summary | ||||
| 3 | Row | Metric | Straight-Line | Double-Declining | Difference |
| 4 | 3 | Year 1 Depreciation Expense | 10775 | 24833 | 14058 |
| 5 | 4 | Year 1 Net Income Impact | -10775 | -24833 | -14058 |
| 6 | 5 | Year 1 Book Value (Total) | 40425 | 26342 | -14083 |
| 7 | 6 | Total Depreciation (All Years) | 40200 | 40200 | 0 |
| 8 | |||||
| 9 | |||||
| 10 |
What This Shows
- Year 1 expense difference: DDB expenses $14,058 more than SL in Year 1
- Net income impact: Higher DDB expense means lower reported profit in Year 1
- Book value difference: DDB shows lower asset values on the balance sheet early on
- Total depreciation: $0 difference — both methods depreciate the same total amount
Verification Checkpoint 3: Total depreciation is the same for both methods. The Difference column reads 0 for the total row.
Definition of Done
Your workbook is complete when all of the following are true:
- Method Comparison sheet has one row per asset from the register
- SL and DDB Year 1 expense are calculated correctly for each asset
- DDB full schedule uses the salvage value floor (MIN formula)
- Both methods end at the same salvage value for every asset
- Check column verifies Book Value = Cost − Accumulated Depreciation
- Statement Impact summary shows expense timing, net income, and book value differences
- Total depreciation is the same for both methods
- All formulas link to the register — no hard-coded numbers in the comparison sheet