Microsoft Office Tutorials and References
In Depth Information
Depreciating the Finer Things in Life
Calculating a mid-year
depreciation schedule
Most assets are not purchased, delivered, and put into service on January 1.
So Excel provides a depreciation formula, DB, that accounts for the periods
being offset from the calendar year. The DB function takes five arguments.
The first four are the typical ones: the cost, the salvage, the life (the number
of periods), and the period for which the depreciation is to be calculated.
The fifth argument is the number of months in the first year. The fifth
argument is optional, but when left out, the function will use 12 as a default.
For the fifth argument, a value of 3 means the depreciation starts in October
(October through December is 3 months), so the amount of depreciation
charged in the first calendar year is small. A value of 11 means the
depreciation starts in February (February through December is 11 months).
Figure 6-3 shows a depreciation schedule created with the DB function. Note
that the life of the asset is 12 years (in cell B4) but that the formula is applied
to 13 different periods. Including an extra year is necessary because the first
year is partial. The remaining handful of months must spill into an extra
calendar year. The depreciation periods and the calendar years are offset from
each other.
Figure 6-3:
Offsetting
depreciation
periods
from the
calendar.
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