Microsoft Office Tutorials and References

In Depth Information

**The SLN function**

TABLE 16-2
Depreciation function arguments

Argument

Description

Initial cost of the asset

Cost

Length of time the asset will be depreciated

Life

Individual time period to be computed

Period

Asset’s remaining value after it has been fully depreciated

Salvage

The SLN function

The SLN function determines the straight-line depreciation for an asset for a single period.

This depreciation method assumes that the depreciation is uniform throughout the useful

life of the asset. The cost or basis of the asset, less its estimated salvage value, is deductible

in equal amounts over the life of the asset. This function takes the arguments
cost
,
salvage
,

and
life
. (For definitions of these arguments, see Table 16-2.)

Suppose you want to determine the annual depreciation for a machine that costs $8,000

new, has a life of 10 years, and has a salvage value of $500. The formula =SLN(8000, 500,

10) tells you that each year’s straight-line depreciation is $750.

The DDB and DB functions

The DDB (double declining balance) function computes an asset’s depreciation at an

accelerated rate—more in the early periods and less later. Using this method, depreciation is

computed as a percentage of the net book value of the asset (the cost of the asset less any

prior years’ depreciation).

The function takes the arguments
cost
,
salvage
,
life
,
period
, and
factor
. All DDB arguments

must be positive numbers, and you must use the same time units for life and period; that

is, if you express life in months, period must also be in months. The
factor
argument is

optional and has a default value of 2, which indicates the normal double declining balance

method. Using 3 for the
factor
argument specifies the triple declining balance method. For

other argument definitions, see Table 16-2.

Suppose you want to calculate the depreciation of a machine that costs $5,000 new and

has a life of five years (60 months) and a salvage value of $100. The formula =DDB(5000,

100, 60, 1) tells you that the double declining balance depreciation for the first month is

$166.67. (Note that
life
is expressed in months.) The formula =DDB(5000, 100, 5, 1) tells you

that the double declining balance depreciation for the first year is $2,000.00. (Note that
life

is expressed in years.)

The DB (declining balance) function is similar to the DDB function except it uses the fixed

declining balance method of depreciation and can calculate depreciation for a particular