Has a student ever asked you why we use fractions for so many calculations in accounting? To answer this in a positive way, we discuss the merits of consistency (you don’t admit that you learned it this way economicsore calculators). We have been using calculators and computer spreadsheets for years. If the New York Stock Exchange changes from fractions to decimals, perhaps we can modify our formula for the calculation of SYD:

The depreciation per digit is now multiplied by the numerator of our old formula. The advantage of this method is that we divide the cost less residual value by the SYD once rather than each time.

Example

An asset that cost $10,000 has an estimated residual value of $1,000. The estimated useful life of the asset is 4 years.

Period	Depreciation Expense	Accumulated Depreciation	Book Value End of Period
1	4 x 4900 = $3,600	$3,600	$6,400
2	3 x $900 = $2,700	$6,300	$3,700

What do you do if there is a rounding difference? Where does the rounding difference belong? How do we handle the rounding difference in any spreadsheet over time? Yes, of course, we place the rounding difference in the last period due to the time value of money.

Adapting to technology makes our classroom more relevant.