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1. In modeling depreciation, which of the following would you not use the OFFSET function to calculate?
Determining economic life
Transposing capital expenditure
2. In calculating depreciation, why do we need to adjust the period counter for the SUM(OFFSET) methodology?
This is required in case of economic lives having non-integer values
This restriction to economic life prevents depreciation charges being included for too many periods and thus incurring over-depreciation
It reminds the end user of the value of the economic life
3. What is the primary reason the annual depreciation rate is calculated standalone rather than as part of the depreciation calculations themselves?
End users can check the rate used is correct
This way, a division by zero error check only needs to be performed once (all of the depreciation calculations may then just refer to the value knowing it will not cause an error)
It makes modeling ‘neater’
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