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.