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.