TOY CAR DEPRECIATION EXERCISE Developments In Business Simulation & Experiential Learning, Volume 24, 1997 TOY CAR DEPRECIATION EXERCISE Christine L. McKeag, University of Evansville David B. Reeder, Jr., University of Evansville ABSTRACT The purpose of this session is to demonstrate how a simple experiential learning exercise can have multiple positive effects. The use of a toy car in the teaching of accounting depreciation concepts is used for the demonstration. The presenters will discuss the implementation of the exercise, possible pitfalls and the numerous benefits of the exercise. INTRODUCTION While many teachers conceptually agree that experiential learning most often has a stronger, deeper effect on the student’s ability to understand and assimilate ideas, many of us are put off by the task of designing such experiences for our classrooms. We often think these activities and exercises must be elaborate and very detailed. This exercise illustrates how a simple, hands on activity can enhance a student’s learning process using the accounting concept of depreciation as the target. Depreciation is often a difficult idea to master because it is so conceptual and because students without real business experience can not relate it to anything they are familiar with. Purpose of the Exercise Besides mastering the topic of depreciation, there are a number of other goals to be achieved in this activity. First, students collaborate in-groups and develop group decision-making and team building skills. Second, students realize that many business decisions involve judgment and estimation based on imperfect knowledge so critical thinking in essential to perform the exercise. Third, the teacher empowers the students to take responsibility for their own learning of this topic. Use of the Exercise Students assemble into small groups of 3-4. Each student is given a small, toy vehicle (luxury cars. vans, mid-size cars, etc.) which has a price tag attached. This price is the only known quantity in the exercise. The group must then decide the other two components of a depreciation calculation – residual value and useful life. Since these are estimates and are relative to the business’ policies and goals significant discussion takes place on these points. For example, two groups may have very similar delivery vans but one group decides that delivery vehicles for their company are replaced every two years, whereas the other group’s policy is to drive the vehicle until it needs major repairs (possibly 4 or 5 years). Once these two estimates are made, the groups are asked to calculate depreciation schedules using several different methods including straight line and double declining balance. Each group’s solution will differ because the three components of the calculation differ. Finally, the groups are asked to assume that they sell the vehicle before it is fully depreciated and to make the calculation to determine any gain or loss that would be recognized at that point. Again, this is a decision point, so answers will vary. Conclusions This simple experience has many advantages over the traditional lecture and problem solving by the teacher. Students collaborate in-groups to come to a common, reasonable decision. This may be one of the first times in their business coursework where they have some realization of the cooperative nature of business and the importance of decision making as a team. As a team, the students learn from on another and teach one another. This is reinforcing for the students that understand the concept and instructional for those who are still learning. This exercise has more of an element of “realism” than a word problem. Students physically hold the car, examine it and make decisions about its usefulness to their business. They develop a sense of ownership not possible when they read a problem “about” an asset and it’s depreciation. One of the major benefits of this activity is that students realize there is more than one “right” answer and that each group develops it’s own answer. They subsequently learn that there is ambiguity in this answer, even if the calculation was precise. 119 Developments In Business Simulation & Experiential Learning, Volume 24, 1997 Finally, by becoming actively involved, students consequently participate more in the class discussion that follows; they have their “own experience” to draw on to add to the class’ discussion. They have fun while learning which contributes to a positive result. It’s a win-win situation, students learn and have fun! 120 Table of Contents Volume 24, 1997 Incorporating Computer Telephony into the MIS Course A Learner Oriented Infrastructure for videoconferencing Based Distance Education Courses The Identification of Temporally Related Structural Elements of the Experiential Component of Electronic Spreadsheet Tasks Does Involvement Influence Learning from Simulation Participation? Some Relationships with Helpfulness and Performance Outcomes Musings on Business Garne Performance Evaluation Performance on a TE Simulation: What does it represent? The Business Policy Game: An International Simulation - An Assessment Tool Students in Free Enterprise as Experiential Learning The Role of Computer Models in Wargames: A Practitioner's view Using Focus Groups as a Tool to Research Learning: A Demonstration and a Discussion Using Medical Simulations to Teach Multi-Cultural Diversity Using the World Game to Internationalize International Exchange Game Community Services Needs Assessment: An Innovative Approach Introducing Students to Potential Total Quality Management Ethical Dilemmas Privacy in the Workplace: A Situational Analysis Antecedents of Learning in Simulations Demonstrating the Learning Effectiveness of Simulation: Where we are and Where we need to go The Use of Computer Simulations as a Pedagogical Aid in Teaching Management Information Systems Evaluating Simulation Learning in a Distant Learning Instructional Model Financial Engineering of Global Investments The Labor History Game: Playing with the Past Perks Participation Assessing Negotiator's Proficiency with a Negotiation role-play The Art of Negotiating Enhancing Learning and Employee Development through the Assessment of Learning Pedagogy Preferences across selected Dimensions of Culture: A Preliminary Investigation Cooperative Learning: What are we Learning? Effective Use of Mastery Based Experiential learning in a Project Course to improve skills in system analysis and Design Simulations and Learning: Can we prove a relationship? (Seminar) Predicting and Reviewing NYSE Stock Prices by use of Basic Statistical Analysis and Logic Toy Car Depreciation Exercise ABSEL as Home Community: An Interactive Exploration Service Learning: Linking Academic Study to Community Development and Business Enhancement Ability of Efficient Evaluation of Knowledge-Based Management Strategies Corporate Ethics Training Programs Modeling Attributes in Demand Functions of Computerized Business Simulations: An Extension of Teach's Gravity Flow Algorithm Expert Systems Combined with Neutral Networks: Tools to Benefit the Marketing Researcher Computer Game Design: New Directions for Intercultural Simulation Game Designers Consistency in Simulation Performance over Time and Across Simulation Games The Impact of an Artificial Market Leader on Simulation Competitor's Strategies Business Plans, Case Studies, and Total Enterprise Simulations: A Natural Co-existence An Exploration into the Non-Use of Business Simulations The Market Game: Interactive Learning Through Market Simulation Plotting Brand Trajectories with the COMPLETE PPM package: A Market Segmentation Analysis and Positioning Tool Me and Mine Inc: An Exercise in Management Theory Learning to Differentiate Leadership from Managerial Position Business Ethics Survey: A Perspective from the Retail Industry Experiential Learning in Demand Analysis for an Agricultural Commodity Marketing on the Internet: A Pedagogical Exercise College Students Need Simple Computer Simulations, Especially for International Business Courses An Analysis of Student Attitudes, Performance, and Strategies in a Simulation Competition Based on a Controlled Product-Market-Entry Game Structure The Crystal Enterprise: Application of a Non-Computerized Simulation Model in a Process of Organizational Change Threshold: A Windows-Based Behaviorally Oriented Total Enterprise Simulation Coaching Business Game Teams Using a Decision Variable Optimizer Rock and Roll is here to Stay: Enhancing Experiential Pedagogy with Musical Exercises An Example of Business Process Analysis Simulation for Customer Software Support The Use of Business Gaming in Hong Kong Academic Institutions Using the Integrative International Simulation INTOPIA Mark 2000 in a Concentrated MBA Curriculum A Group Experience as an Integrated Part of the Core Management Course Empowered Learning in the Classroom The Inter-Group Interaction: An Innovative Approach to Cooperative Learning Courses that Utilize Student Team: An Approach to enhancing their Effectiveness Thoughts about the Measurement of Learning: The Case for Guided Learning and Associated Measurement Issues Measuring Student Learning Using Business Simulations: A Theory Based Perspective On the Use of PC Fingame in an Undergraduate Finance Course How Managers get Things Done: A Virtual Soundbite Internet Experiential learning in the Principals of Marketing Classroom: A Pedagogical Approach Current Student Perceptions Relative to Business Simulations Beyond Capitalism: Designing Business Policy and Social Justice The Use of Boards of Directors to Evaluate Reports and Presentations in an Undergraduate Business Policy Course Beacon Lumber: An Experiential Introduction to Financial Accounting The Application of Organizational Motivation Principles: The Experiential Business Simulation Motus Manufacturing Avoiding a Bogey: Grading Case Discussions Scientifically Communicating Consumer Behavior II: A Modified Exercise Using Personal Consumption Journals in Condensed Courses Designing Instruments for Assessing the Effectiveness of Simulations, (Seminar) 360º Performance Feedback: Appraisal vs. Assessment The Cafeteria Approach to Managing an Academic Career: Remaining Non-Perishable while Doing Your Own Thing An Experiential Exercise Related to Person-Organization Fit and it's Consequences For Today's Dynamic and Changing World, Business Simulations need to be expanded to encompass Much Greater Complexity: A Demonstration The Incident Process: A Case in Reverse Contextually-Anchored Business Simulations The Energy Factor: Building Motivation in the Simulation Gaming Environment The Design of an Internet Game