Microsoft Office Tutorials and References

In Depth Information

**Chapter 33: Accounting Depreciation Functions**

CHAPTER
33

Accounting Depreciation Functions

Wikipedia defines depreciation as
“
a term used in accounting, economics, and

finance to spread the cost of an asset over the span of

several years.

Excel has a number of these functions as part of its financial func-

tions. All these function have similar features: initial cost, salvage value, and the

numbers of years. This chapter will cover only two functions: the Straight Line

Depreciation, SLD, and the Sum of the Years Digits, SYD. The first function is a

simple depreciation method and the second one is an accelerated one.

”

SLD STRAIGHT LINE DEPRECIATION

This function assumes the same, or a uniform, depreciation rate for all of the years of

the economic life of the asset. For example if the initial value of the asset is $60,000

and the salvage value five years later is $10,000, then the annual depreciation would

be $10,000 [(60,000

10,000)/5]. The following is the syntax of the Straight Line

Depreciation function:

–

SLN

ð

cost , salvage, life

Þ

Cost
is the initial cost of the asset.

Salvage
is the value at the end of the depreciation period or the economic life of

the asset.

Life
is the number of periods over which the asset is depreciated.

The function is shown in Figure 33.1. The depreciation is $10,000 per year for

the lifetime of the asset.

SYD SUM OF THE YEARS DIGITS

Sum of the Years Digits is different. This is an accelerated depreciation function. The

depreciation rate is different from year to year. The syntax of this function is:

SYD

ð

cost , salvage, life, per

Þ