Microsoft Office Tutorials and References

In Depth Information

**Depreciation Calculations**

Table 12-1 summarizes Excel’s depreciation functions and the arguments used by each. For

complete details, consult Excel’s Help system.

Table 12-1:
Excel Depreciation Functions

Function

Depreciation Method

Arguments*

SLN

Straight-line. The asset depreciates by the same amount each year

of its life.

cost, salvage, life

DB

Declining balance. Computes depreciation at a fixed rate.

cost, salvage, life,

period, [month]

DDB

Double-declining balance. Computes depreciation at an

accelerated rate. Depreciation is highest in the first period and decreases

in successive periods.

cost, salvage, life,

period, month, [factor]

SYD

Sum of the year’s digits. Allocates a larger depreciation in the

earlier years of an asset’s life.

cost, salvage, life, period

VDB

Variable-declining balance. Computes the depreciation of an

asset for any period (including partial periods) using the

doubledeclining balance method or some other method you specify.

cost, salvage, life, start

period, end period,

[factor], [no switch]

*Arguments in brackets are optional.

The arguments for the depreciation functions are described as follows:

h
cost:
Original cost of the asset.

h
salvage:
Salvage cost of the asset after it has fully depreciated.

h
life:
Number of periods over which the asset will depreciate.

h
period:
Period in the life for which the calculation is being made.

h
month:
Number of months in the first year; if omitted, Excel uses 12.

h
factor:
Rate at which the balance declines; if omitted, it is assumed to be 2 (that is,

double-declining).

h
rate:
Interest rate per period. If you make payments monthly, for example, you must

divide the annual interest rate by 12.

h
no switch:
True or False. Specifies whether to switch to straight-line depreciation when

depreciation is greater than the declining balance calculation.

Figure 12-21 shows depreciation calculations using the SLN, DB, DDB, and SYD functions. The

asset’s original cost, $10,000, is assumed to have a useful life of ten years, with a salvage value of

$1,000. The range labeled Depreciation Amount shows the annual depreciation of the asset. The

range labeled Value of Asset shows the asset’s depreciated value over its life.