How to use the DB function
What is the DB function?
The DB function calculates the depreciation of an asset for a given period using the fixed-declining balance method.
What is depreciation of an asset?
Depreciation is an accounting method that allows businesses to allocate the cost of a tangible asset over its useful life. It represents how much of an asset’s value has been used up over time.
Depreciation helps businesses to match their expenses with their revenues, and to reduce their taxable income by deducting the depreciation expense.
What is fixed-declining balance method?
The fixed-declining balance method is an accelerated depreciation method used to depreciate assets faster than straight-line depreciation.
A fixed rate or percentage is applied each year to the remaining book value, this causes the depreciation amount to decline each year as the book value declines.
Results in higher depreciation early on and lower depreciation later compared to straight-line. Useful for assets expected to lose more value early on in their lifespan.
DB function Syntax
DB(cost, salvage, life, period, [month])
DB function Arguments
| Cost | Required. What you pay for the asset. |
| Salvage | Required. The value of the asset at the end of depreciation. |
| Life | Required. The number of periods the asset is being depreciated. |
| Period | Required. The period you want to know the depreciation of. |
| [Month] | Optional. The number of months in the first year. |
DB function example
This example demonstrates the depreciation of an asset valued 500,000 across 10 periods ending with a salvage value of 50,000. The example shows that depreciation is larger the initial periods which is shown in the chart below.
Formula in cell F3:
The DB function calculates the decline in value for each period from 1 to 10, the remaining value of the asset is shown in cell range G3:G12. The cost value is specified in cell C3 and the salvage value is specified in cell C4.
Lastly, the number of periods is specified in cell C5. The DB function calculates the depreciation for a given period using these input values.
How is the DB function calculated?
The DB function calculates the depreciation of a period like this:
(cost - total depreciation from prior periods) * rate
where:
rate = 1 - ((salvage / cost) ^ (1 / life))
The first period is calculated like this:
cost * rate * [month] / 12
The last period is calculated like this:
((cost - total depreciation from prior periods) * rate * (12 - [month])) / 12
Functions in 'Financial' category
The DB function function is one of many functions in the 'Financial' category.
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