DB(cost, salvage, life, period, month)

The DB function calculates the depreciation of an asset for a specified period using the fixed-declining balance method. DB works out a fixed rate which it then uses to calculate depreciation. The function arguments are:

cost

is the initial value of the asset

salvage

is the value at the end of the depreciation

life

is the number of years over which the asset depreciates

period

is the specified period for which the depreciation is sought

month

is the number of months between the purchase date and the end of the first period (12 if omitted)

For all periods except the first and last, DB calculates the depreciation per period using the equation:

(cost - total depreciation from previous periods) * rate

where rate is given by:

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For depreciation over the first period DB uses the equation:

cost * rate * (month/12)

For depreciation over the last period DB uses the equation:

[(cost - total depreciation from previous periods) * rate * (12 - month)] / 12

For example, a new yacht is purchased for $1,000,000. Its active life is 20 years and its salvage value at the end of this time is $50,000. The purchase was made at the end of May and the buyer, who attends a boat show at the end of every October, wishes to know its depreciation over the periods between boat shows for the first 4 shows after the initial purchase. The first period is of 5 months (from May to October) and the next three periods are whole years. The depreciation for the first 4 periods is calculated using these formulas:

DB(1000000, 50000, 20, 1, 5) returns a depreciation of $57,917

DB(1000000, 50000, 20, 2, 5) returns a depreciation of $130,950

DB(1000000, 50000, 20, 3, 5) returns a depreciation of $112,748

DB(1000000, 50000, 20, 4, 5) returns a depreciation of $97,076

Note: A 20-year span contains at most 21 periods, and therefore setting period to greater than 21 will result in DB returning a #VALUE error message.

See also:

Other financial functions