Microsoft Office Tutorials and References
In Depth Information
The VDB function
period in the asset’s life. It takes the arguments cost , salvage , life , period , and month . The
life and period arguments must use the same units. The optional month argument is the
number of months depreciated in the first year, which is 12—a full year—if it’s omitted. For
example, to calculate the real depreciation for the first period on a $1,000,000 item with a
salvage value of $100,000, a life of six years, and seven months in the first year, use the
formula =DB(1000000, 100000, 6, 1, 7), which returns $186,083.33.
The VDB function
The VDB (variable declining balance) function calculates the depreciation of an asset for
any complete or partial period, using either the double declining balance or another
accelerated-depreciation factor you specify.
This function takes the arguments cost , salvage , life , start , end , factor , and no switch ). The
start argument is the period after which depreciation will be calculated, and end is the last
period for which depreciation will be calculated. These arguments determine the
depreciation for any length of time during the life of the asset. The life , start , and end arguments
must all use the same units (days, months, or years). The optional factor argument is the
rate at which the balance declines. If you omit factor , Excel assumes that the argument is 2
and uses the double declining balance method. The optional no switch argument is a value
that specifies whether to switch to straight-line depreciation when the straight-line
depreciation is greater than the declining balance. If you omit no switch or type 0 (FALSE) , Excel
switches to straight-line depreciation; to prevent the switch, type 1 (TRUE) . For other
argument definitions, see Table 16-2.
Suppose you purchased a $15,000 asset at the end of the first quarter of the current year
and that this asset will have a salvage value of $2,000 after five years. To determine the
depreciation of this asset next year (the fourth to seventh quarters of its use), use the
formula =VDB(15000, 2000, 20, 3, 7). The depreciation for this period is $3,760.55. The units
used here are quarters. Notice that the start argument is 3, not 4, because we are jumping
over the first three periods to start in the fourth.
The SYD function
The SYD function computes an asset’s depreciation for a specific time with the sum-of-the-
years’-digits method. The SYD function takes the arguments cost , salvage , life , and period .
(For definitions of these arguments, see Table 16-2.) You must use the same units for life
and period . Using the sum-of-the-years’-digits method, Excel calculates depreciation on the
cost of the item less its salvage value. Like the double declining balance method, the
sumof-the-years’-digits method is an accelerated depreciation method.
Suppose you want to determine the depreciation of a machine that costs $15,000 and has
a life of three years and a salvage value of $1,250. The formula =SYD(15000, 1250, 3, 3) tells
you that the sum-of-the-years’-digits depreciation for the third year is $2,291.67.