Microsoft Office Tutorials and References
In Depth Information
Although the name of this method contains the world double, Microsoft
covered the possibility of other multipliers. There is a 150DB method that
multiplies the rate by 1.5 instead of 2. To calculate 150DB, you use 1.5 as the
fifth argument. If no fifth argument is supplied, the fifth argument is assumed
to be 2, resulting in DDB.
The DDB function returns the depreciation of an asset for a specified period
using the double-declining-balance method or some other specified method.
This function takes the following arguments:
cost — This is the initial cost of the asset.
salvage — This is the value at the end of the depreciation period.
life — This is the number of periods over which the asset is being de-
period — This is the period for which you want to calculate the de-
preciation. The periodmust use the same units as life.
factor — This is the rate at which the balance declines. If factoris
omitted, it is assumed to be 2, which is the double-declining-balance
Keep in mind that all five of the arguments listed must be positive
To allow DDB to work, you need to abandon the method at some point and
switch to a straight-line method for the remaining asset value. If you at-
tempt to use DDB for the entire life of the asset, you will not write off enough
of the value.
Figure 13.11 illustrates how DDB fails to accumulate $500,000 of depre-
ciation. You might want to use the newer VDB method, which automatically
switches for you. Column D in Figure 13.11 shows this method.