MS Excel for Beginners | Financial Functions | Double Declining Balance Depreciation Method | DDB()
Double-Declining Balance method to calculate depreciation of assets
DDB is ideal for assets that lose their values very rapidly or quickly become obsolete. This may happen with certain computer equipment, mobile devices, and other high-tech equipments, which are generally useful their early life but become less as new models are brought to market.
Syntax: DDB(cost, salvage, life, period, [factor])
The DDB function syntax has the following arguments:
Cost: The initial cost of the asset.
Salvage: The value at the end of the depreciation. (Scraped Value)
Life: Useful life of the asset
Period: The period for which you want to calculate the depreciation. Period must use the same units as life.
Factor: The rate at which the balance declines. If factor is omitted, it is assumed to be 2
Depreciation is highest in the first period and decreases in successive periods.
DDB uses the following mathematical formula to calculate depreciation for a period:
(Cost - Total Depreciation from prior periods) x (Double Rate)
Rate = 1 ÷ Life of Fixed Asset
Double Rate = 2 x Rate
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