Microsoft Office Tutorials and References
In Depth Information
Depreciating the Finer Things in Life
In cell F9 in Figure 6-2, the formula is =SYD(\$B\$2,\$B\$3,\$B\$4,B9). Note
how the first three arguments are fixed to the cells B2, B3, and B4. With this
formula entered in cell F9, simply dragging the formula (using the fill handle
in the lower-right corner of the cell) down to F20 fills the range of cells that
need the calculation. The fourth argument changes in each row. For example,
cell F20 has this formula: =SYD(\$B\$2,\$B\$3,\$B\$4,B20).
Creating an even faster accelerated
depreciation schedule
The Double Declining Balance method provides an accelerated depreciation
schedule but calculates the amounts differently than the Sum of Years’ Digits
method.
Although rooted in the doubling of the Straight Line method (which is not an
accelerated method), the calculation for each successive period is based on
the remaining value of the asset after each period instead of to the
depreciable cost. Because the remaining value is reduced each period, the schedule
for each period is different.
The DDB function takes five arguments. The first four are required:
Cost
Salvage
Life (the number of periods)
Period for which the depreciation is to be calculated
The fifth argument is the factor. A factor of 2 tells the function to use the
Double Declining Balance method. Other values can be used, such as 1.5. The
factor is the rate at which the balance declines. A smaller value (than the
default of 2) results in a longer time for the balance to decline. When the fifth
argument is omitted, the value of 2 is the default.
The DDB function returns a different depreciation amount for each period, so
the period must be entered as an argument. In Figure 6-2, each formula in the
range H9:H20 uses the DDB function but has a different period as the fourth
argument. For example, cell H9 has the formula =DDB(\$B\$2,\$B\$3,\$B\$4,B9),
and cell H10 has the formula =DDB(\$B\$2,\$B\$3,\$B\$4,B10). The last
argument provides a different value.
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