All right, so let us start learning deputization with the simplest method out there, and that is a
straight line method.
So what is a straight line method?
In a straight line method, you charge an equal deputization charge to each year of life.
That is basically the fundamental definition of a straight line method, not just to devise the straight
line.
Let's take this example and please ignore everything that is mentioned at the bottom of the chute.
We are just focusing at this area now at this moment.
So the cost of the asset is a million dollars and salvage value or call it residual value or call it
resell value or scrap value, whatever you like.
That is two hundred thousand.
And the life of the asset is five years.
And we are supposed to use the depreciation method of a straight line.
So first of all, let us calculate the straight line method.
Deputization charges in straight line Mattock.
Per year, and that will be the same for each year.
I'm doing it here, so the first thing that we do is cost minus the value that is your cost, minus
social value.
And then we have to divide it with the useful life.
And just to make sure that answer comes correct, I have to apply.
I should apply the brackets here as well.
Costs minus total value and divided by useful life.
So you can see that the answer here is one hundred and sixty thousand.
So that will be the deputy assistant charged per year and that will be for all the five years, equal
deputization each year.
So if I just copy paste it for five years, you will see that you can.
First of all, you can notice that we are having some atmosphere.
And the reason for that is very simple.
If I can just open this formula, you will see what is happening.
So it is basically going one step ahead because we are going one step ahead here.
And this is called relative reference.
So we are not using relative reference here.
I want to make sure that when I move forward to your two, three and four and five, my cells only these
cells are getting used to what I have to do.
I have to go back and before I copy paste, I will go to Etzel and I will press F for and by doing so,
we call it locking the cells.
And now you will see that if I copy paste, the deputization will be calculated correctly and you can
see it here each year has been calculated correctly.
So if I can just label it as your one do and not, I will just copy these.
I will drag it here so that actually can automatically fill for me.
So all five years have the same deputization charge that is one hundred and sixty thousand.
Now, one important thing that I want you to notice is that if I sum all of them here, that will be
if I can just some here for you.
Some of all of these.
That will be 800000 in total, so that is what we expect for the deposition to be because you purchased
the asset for a million dollars and you will sell it for two hundred thousand.
That means the total deputization should be eight hundred thousand.
And that is how we have worked out in a straight line method.
Now, you must be thinking that it is going so much basic.
Why is it so?
Because this is we are using very simple method in this particular example.
But as we move forward to other methods of deposition, these basic concepts would be very helpful for
us.
No, I will just lead the sort of deposition here and I will move to the formula now.
So rather than working so much here on this simple maneuver, that mission using Microsoft Excel, we
can use this formula of Microsoft Excel, which says equals SLN.
SLN states where it stands for straight.
The precision and the formula is excellent.
That is function and then cost and the salvage value and then life.
So if I can just do it here, I will just be using the values from the above example.
I will.
Right now, Excel is giving me the formula here.
I will just press the tab on my keyboard tab, the tab key.
And you can see that Excel has opened the formula for me.
The first thing Excel is asking me is you can see here what is asking you.
The first thing they are asking us is cost.
So I will go up there and I will select the self.
Then I will select the salvage value that is here, and then I will select the life that is here.
And then I will close the bracket and I will press enter and you will see that Excel has greatly given
you the same calculation, the same answer that you have worked out here so you could do manually using
this method here, straight line method, or you can use this formula.
Now, definitely you are thinking that it was very simple, even without formulas.
But yes, for straight it was, but for other methods it will not be.
So we will learn the formulas and we will follow the formulas for all the deposition.
So that is it.
So that is deposition charge for each year.
Now you can copy and paste this to all five years.
If I can just write it here like year one and then year two, or maybe I should have worked out all
of this year.
So I will just copy and paste and I cannot be a start like that.
You know, it will be a relative reference and that would be a problem for me.
So I will just copy and paste this to show you.
And you can see that it is an error.
And if I can just open the formula, you can see Exelis giving the relative reference.
So before I copy and paste, what I'm going to do is that I'm going to lock the cells using the pressing,
using their fork and knife.
I copy and paste.
The next five years I will delete the first one next five years.
You're one year, two and onwards.
You can see the text that has done the same thing for us and using this fast track approach.
So that is the straight line method.
I really hope that you have you must have find it very simple.