In this video, we will talk about another function of calculating depreciation i.e. DDB function in excel. The DDB Function Returns the depreciation of an asset for a specified period using the double-declining balance method or some other method you specify.
This can be really helpful in accurately calculating your depreciation expense each year. We will walk through an example so that you can see how it works!
Previously we have covered SLN function, SYD Function and DB Function to calculate depreciation with different methods.
How to use DDB Function in Excel?
The DDB function in Excel is very easy to use. You simply need to input the following information into the function:
- The name of the asset you are depreciating
- The start date of the depreciation period
- The end date of the depreciation period
- The depreciation method (double declining balance, straight line, etc.)
- The salvage value of the asset at the end of the depreciation period
Lets learn and explain the syntax of DDB function in excel;
Cost = Initial cost of the asset
Salvage = is the value of an asset at the end of its useful life.
Lifetime= is total number of periods over which an asset is depreciated (useful life of an asset)
Period= is the current period for which we are calculating depreciation
Factor = Depreciation rate per period. If omitted, it is assumed to be two (i.e., double-declining balance method).
For example, if you wanted to calculate the depreciation for a laptop that was purchased on January 15th, 2016 and will be used for three years with a salvage value of $100, you would input "Laptop" into cell A15, "01/15/2016" into cell B15, "12/31/2018" into cell C15, and "DB" into cell D15. This would return the depreciation expense for the laptop over the three year period of $198.
As you can see, the DDB function in Excel is a very useful tool for accurately calculating your depreciation expenses. Be sure to try it out for yourself and see how easy it is to use!