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Tax season is in full swing, and you’ve never been busier. To make matters worse, the new guy in the office has made everything ten times harder. Not only do you have your own files stacked on your desk, but you need to make sure all his work is satisfactory. Not a single one of his tasks has reached you without the need for some major corrections. This newest one is no different. It is a simple depreciation schedule comparing Book and Tax depreciation. Though frustrated, you remember being in his shoes. You summon an extra measure of patience and start on the corrections.
There are a total of 14 errors in the spreadsheet from your coworker. You must correct them all to find the correct difference between book and tax depreciation. Here are some hints to get you started:
- If a formula is referencing a depreciation table, that reference is correct. It is possible that a different part of the formula is incorrect, however.
- None of the columns I through L should be hardcoded.
- While Salvage Value is considered for Book purposes, it is not for Tax purposes.
- Any asset with a 39 Tax Useful Life was Placed into service in January of whichever year it was placed into service.
Suggestions and Hints
- Whenever you are checking for errors, the first thing you should do is go through the built in error check found in the Formula Tab
- Likewise, you can look at all the formulas by hitting the show formulas button on the Formulas Tab.
- Make sure all the signs are correct! (+ or -)
- L13 might be the hardest one to find. With MACRS, buildings are depreciated in a straight line except for the first and last year. As such, for tax purposes, to get the accumulated depreciation, find the straight-line amount per year, then multiply it by the number of years in service less one, and then add the depreciation for the first year.