The VDB formula is used to calculate the depreciation of an asset over a period of time. This formula is especially useful for determining the depreciation of tangible assets like cars, buildings and furniture. The VDB formula uses a set of variables to calculate the current depreciated value of an asset based on its original cost, salvage value, and length of its operational life.
In this article, we will explain how you can use the VDB formula in Excel, along with step-by-step instructions for setting up and running calculations.
The VDB formula is: =VDB(cost, Residual Value, Life, Start_period, End_period, [factor], [no_switch])
The first argument is the cost of the asset, the second argument is the residual value, the third argument is the life of the asset, the fourth argument is the starting period, and the fifth argument is the end period.
The no_switch argument is an optional component of the VDB formula, which determines whether the method should switch to straight-line depreciation when it is bigger than the declining balance calculation. We will just ignore this here.
Make sure the references in the formula remain constant by adding a “$” sign before the column and row references. Here are the steps to Perform the VDB Function in a Worksheet:
- Go to the cell where you want to perform the VDB function.
- Input the formula “=VDB(cost, residual value, life, start period, end period, [factor], [no switch])”.
- In our case, the formula will be =VDB($B$2, $B$3, $B4$4, A7-1, A7). Press Enter to get the result.
- Drag the formula down the column to calculate the depreciation value for each year.
We have gone through how to use the VDB formula in Excel, along with the step-by-step instructions for setting up and running calculations. With this guide, you should now be able to quickly and accurately calculate depreciation values using the VDB function. Be sure to take advantage of this tool when calculating depreciating assets in Excel.