Page 353 - Excel 2007 Bible

21_044039 ch16.qxp 11/21/06 11:07 AM Page 310
Part II
Working with Formulas and Functions
Excel offers five functions to calculate depreciation of an asset over time. Depreciating an asset places a
value on the asset at a point in time, based on the original value and its useful life. The function that you
choose depends on the type of depreciation method that you use.
Table 16.5 summarizes the Excel depreciation functions and the arguments used by each. For complete
details, consult the Excel online Help system.
TABLE 16.5
Excel’s Depreciation Functions
Depreciation Method
Function
Cost, Salvage, Life
Straight-line. The asset depreciates by the same amount
SLN
each year of its life.
Declining balance. Computes depreciation at a fixed rate.
Cost, Salvage, Life, Period, [Month]
DB
Double-declining balance. Computes depreciation at an
Cost, Salvage, Life, Period, Month,
DDB Depreciation Calculations Arguments*
accelerated rate. Depreciation is highest in the first period [Factor]
and decreases in successive periods.
SYD Sum of the year’s digits. Allocates a large depreciation in Cost, Salvage, Life, Period
the earlier years of an asset’s life.
VDB Variable-declining balance. Computes the depreciation of Cost, Salvage, Life, Start Period,
an asset for any period (including partial periods) using End Period, [Factor], [No Switch]
the double-declining balance method or some other
method you specify.
* Arguments in brackets are optional.
Here are the arguments for the depreciation functions:
n Cost: Original cost of the asset.
n Salvage: Salvage cost of the asset after it has fully depreciated.
n Life: Number of periods over which the asset will depreciate.
n Period: Period in the life for which the calculation is being made.
n Month: Number of months in the first year; if omitted, Excel uses 12.
n Factor: Rate at which the balance declines; if omitted, it is assumed to be 2 (that is,
double-declining).
n Rate: Interest rate per period. If you make payments monthly, for example, you must divide the
annual interest rate by 12.
n No Switch: True or False. Specifies whether to switch to straight-line depreciation when deprecia-
tion is greater than the declining balance calculation.
310