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DB Function in Excel: The Fixed-Declining Balance Method for Depreciation

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Duration: 5:06
Submitted: 2 months ago
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Description:

In this video, we will learn about the DB Function in Excel. This function is used to calculate depreciation for an asset using the fixed-declining balance method. We will learn how to use this function and see some practical examples of its use. Stay tuned!

In the previous videos, we have learnt the SLN function and SYD function in excel to calculate depreciation in different methods.

What is DB Function in excel?

The DB Function in Excel is used to calculate depreciation for an asset using the fixed-declining balance method.

How to use DB Function in excel?

The syntax of the DB function is as follows:

DB(cost, salvage, life, period)

Where:

Cost - The initial cost of the asset

Salvage - The value of the asset at the end of its life

Life - The number of periods over which the asset is depreciated

Period - The period for which you want to calculate depreciation, in this case five years.

The DB function in excel can be used in a variety of ways. Let's see some practical examples:

Example #

We have the following data:

- Initial Cost of Asset (A) = $100,000

- Salvage Value of Asset (S) = $0

- Life of Asset in years (N) = 20

- Depreciation Rate (%)= 40%

The first step is to calculate the depreciation rate per year. This can be done by dividing the depreciation rate (%) by the number of years in the life of the asset.

In this example, the depreciation rate per year would be 40% / 20 years = 0.02 or two percent.

The second step is to calculate the depreciation for each year using the following formula:

depreciation = (cost - salvage) / life

In this example, the depreciation for each year would be:

- Year one = ($100,000 - $0) / 20 years = $5000

- Year two = ($95,000 - $0) / 20 years = $4750

- And so on...

The final step is to sum up all the depreciation figures for each year.

In this example, the total depreciation would be:

- Year one = $5000

- Year two = $4750

- Year three = $4250

- And so on...

This gives us a total depreciation of $27,500 over the life of the asset.

In this video, we have learned about the DB Function in Excel. This function is used to calculate depreciation for an asset using the fixed-declining balance method. The DB function can be implemented in different ways and has a wide range of applications that would suit any need you may have. Don't know how to use it? Simply let us know in the comments below and we will get back to you as soon as possible. Thanks for watching!