Chapter 15: Creating Formulas for Financial Applications
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Function Depreciation Method Arguments*
SYD Sum of the year’s digits. Allocates a large depreciation in
the earlier years of an asset’s life.Cost, Salvage, Life, PeriodVDB Variable-declining balance. Computes the depreciation of
an asset for any period (including partial periods) using the
double-declining balance method or some other method
you specify.Cost, Salvage, Life, Start
_Period, End_Period,
[Factor], [No Switch]* Arguments in brackets are optional.Here are the arguments for the depreciation functions:l Cost: Original cost of the asset.l (^) Salvage: Salvage cost of the asset after it has fully depreciated.
l Life: Number of periods over which the asset will depreciate.
l (^) Period: Period in the life for which the calculation is being made.
l Month: Number of months in the first year; if omitted, Excel uses 12.
l (^) Start_Period:Starting period for the depreciation calculation.
l End_Period: Ending period for the depreciation calculation.
l (^) Factor: Rate at which the balance declines; if omitted, it is assumed to be 2 (that is,
double-declining).
l (^) No Switch: TRUE or FALSE. Specifies whether to switch to straight-line depreciation
when depreciation is greater than the declining balance calculation.
Figure 15.15 shows depreciation calculations using the SLN, DB, DDB, and SYD functions. The
asset’s original cost, $10,000, is assumed to have a useful life of 10 years, with a salvage value of
$1,000. The range labeled Depreciation Amount shows the annual depreciation of the asset. The
range labeled Value of Asset shows the asset’s depreciated value over its life.
On the CD
This workbook is available on the companion CD-ROM. The file is named depreciation calculations
.xlsx.
Figure 15.16 shows a chart that graphs the asset’s value. As you can see, the SLN function pro-
duces a straight line; the other functions produce a curved line because the depreciation is greater
in the earlier years of the asset’s life.