# How to use the DDB function

**What is the DDB function?**

The DDB function calculates the depreciation of an asset for a given period using the double-declining balance method or based on user input.

**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 assetâ€™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 the double-declining balance method?**

The double-declining balance method is an accelerated depreciation technique used in accounting and finance, it is a specific application of the declining balance method.

Depreciation is calculated by multiplying the asset's book value by a fixed rate of 200% each year. This results in the asset being fully depreciated over roughly half the straight-line depreciation schedule.

The depreciation amount declines each year as the asset's book value declines, depreciation is highest in the first year, tapering down each subsequent year.

### DDB Function Syntax

DDB(*cost, salvage, life, period*, [*factor*])

### DDB 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. |

[factor] |
Optional. How quickly the balance declines, default value is 2 (the double-declining balance method). |

### DDB Function example

This example demonstrates the depreciation of an asset valued 500,000 across 10 periods ending with a salvage value of 50,000 using the double-declining balance method. The example shows that depreciation is larger for the initial periods.

Formula in cell F3:

The DDB 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 DDB function calculates the depreciation for a given period using these input values.

The image above shows a chart populated with values from the DDB function using two different factors 2 and 3. Factor 3 shows a significant larger initial decline than a factor of 2.

### How is the DDB function calculated?

Here is how the DDB function calculates the depreciation of a period:

Min( (cost - total depreciation from prior periods) * (factor/life), (cost - salvage - total depreciation from prior periods) )

### Functions in 'Financial' category

The DDB function function is one of 29 functions in the 'Financial' category.

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