Depreciation is a common financial concept that refers to the decrease in the value of an asset over time. This can be due to wear and tear obsolescence or other factors. In Excel, a built-in function called “DB” can be used to calculate the depreciation of an asset over time.
In this article, we will show you how to use the Excel DB function to calculate an asset’s depreciation value.
Step-by-Step Instructions
The DB function in excel requires five arguments.
- Cost is the initial cost of the asset.
- Residual value is the asset’s value at the end of its useful life.
- Useful life is the number of periods over which the asset is depreciated.
- The period is the number of the year for which you want to calculate the depreciation.
- The month is an optional argument that specifies the number of months into the year for which you want to calculate the depreciation. If you omit this argument, Excel assumes the depreciation is for the full year.
Steps to follow:
- Create a new excel sheet and input the cost of the asset, the residual value, and the useful life of the asset in their respective cells.
- In the cell where you want to perform the DB function, input the formula “=DB(cost, residual value, useful life, period, [month])”. For example, in our case, the formula will be =DB($B$2, $B$3, $B4$4, A7).
The cells are made absolute by using the $ symbol to ensure that the reference does not change when copying cells. - Press Enter to get the value. Drag the formula down the column to calculate the depreciation value for each year.
It’s that simple! With this formula, you can easily calculate an asset’s depreciation value over time in Excel.
Conclusion
Excel’s DB function makes it a cinch to accurately compute the depreciation of an asset over time, allowing you to gain more comprehensive insights into its worth. By following these simple steps, you can easily track the depreciation of your assets and make more informed financial decisions.
