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:
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: