The cmplete BA II plus Guide

1. The Setup: Meet the Variables

First, let’s open the worksheet. Press 2nd then DEPR (it is on the number 4 key).

Before we choose a method, you need to know the four questions the calculator will ask you:

• LIF (Life): How long will the asset last? (e.g., 5 years).
• M01 (Starting Month): This is the “trap” variable! It asks which month you bought the asset.
  • The Hack: Unless the problem specifically says “Bought in July,” always set this to 1. If you leave it at a weird number, the calculator will prorate the first year and give you weird answers.
• CST (Cost): How much you paid for it.
• SAL (Salvage Value): What you can sell it for at the very end (scrap value).

2. Method 1: Straight Line (SL)

The “Slow and Steady” Method.

This is the easiest one. The asset loses the exact same amount of value every single year.

The Scenario: You buy a Delivery Truck for $50,000. It will last 5 years. At the end, you can sell it for scrap for $5,000.

The Steps:

1. Press 2nd then DEPR.
2. Press 2nd then CLR WORK (Clear the old junk!).
3. Look at the top of the screen. If it doesn’t say SL, press 2nd then SET until it does.
4. Scroll down to LIF: Type 5 then press ENTER.
5. Scroll down to M01: Type 1 then press ENTER (Assume bought in January).
6. Scroll down to CST: Type 50000 then press ENTER.
7. Scroll down to SAL: Type 5000 then press ENTER.

The Results:

• Scroll down to DEP (Depreciation Expense): You will see 9,000. This means the truck loses $9k every year.
• Scroll down to RBV (Remaining Book Value): This is what the truck is worth on paper after that year.

3. Method 2: Sum-of-the-Years’ Digits (SYD)

The “Front-Loaded” Method.

This method assumes the asset loses way more value when it is new (like a car) and less value when it is old. The math for this is annoying ($5/15, then 4/15, etc.). The calculator does it instantly.

The Steps:

1. Stay in the DEPR worksheet.
2. Scroll back to the top until you see the method name.
3. Press 2nd then SET until you see SYD.
4. Good news: Your variables (Cost, Life, Salvage) are still saved! You don’t need to re-type them.
5. Scroll down to DEP.

The Results:

• Year 1 Depreciation: You should see 15,000. (Notice how much higher this is than the $9,000 from the Straight Line method?).
• Check Year 2: Scroll up to the YR variable, type 2 then ENTER. Scroll back down to DEP to see the depreciation for the second year ($12,000).

4. Method 3: Declining Balance (DB)

The “Aggressive” Method.

This is what companies use for taxes. It is extremely fast depreciation. Usually, we use “Double Declining Balance,” which means it depreciates at 200% of the normal rate.

The Steps:

1. Scroll to the top. Press 2nd then SET until you see DB.
2. The screen will ask for a number.
   • For Double Declining, type 200 then press ENTER.
   • For 150% Declining, type 150 then press ENTER.
3. Scroll down to check your DEP and RBV.

Warning: In Declining Balance, the calculator will eventually switch to Straight Line logic automatically near the end of the asset’s life to make sure the value doesn’t drop below the Salvage Value. The calculator handles this crossover logic for you, which is a huge lifesaver on exams.