DDB

Used only in ReliaSoft Workbooks

Description: Returns the asset depreciation for a specified period using the double-declining balance method, or another method you specify.

Syntax: DDB(Cost, Salvage, Life, Period, [Factor])

  • Cost is the initial cost of the asset.
  • Salvage is the value at the end of the depreciation (sometimes called the salvage value of the asset). This value can be 0.
  • Life is the number of periods over which the asset is being depreciated (sometimes called the useful life of the asset).
  • Period is the period for which you want to calculate the depreciation. Period must use the same units as life.
  • Factor is the rate at which the balance declines. If factor is omitted, it is assumed to be 2 (the double-declining balance method).
  • All five arguments must be positive numbers.

Remarks:

  • The double-declining balance method computes depreciation at an accelerated rate. Depreciation is highest in the first period and decreases in successive periods. DDB uses the following formula to calculate depreciation for a period:

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

  • Change the Factor if you do not want to use the double-declining balance method.
  • Use the VDB function if you want to switch to the straight-line depreciation method when depreciation is greater than the declining balance calculation.

Example:

Suppose a factory purchases a new machine. The machine costs $2,400 and has a lifetime of 10 years. The salvage value of the machine is $300. The following examples show depreciation over several periods. The results are rounded to two decimal places.

  • DDB(2400, 300, 3650, 1) = $1.32 [the first day's depreciation. The software automatically assumes that factor is 2.]
  • DDB(2400, 300, 120, 1, 2) = $40.00 [the first month's depreciation]
  • DDB(2400, 300, 10, 1, 2) = $480.00 [the first year's depreciation]
  • DDB(2400, 300, 10, 2, 1.5) = $306.00 [the second year's depreciation using a factor of 1.5 instead of the double-declining balance method]
  • DDB(2400, 300, 10, 10) = $22.12 [the 10th year's depreciation. The software automatically assumes that factor is 2.]

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