MS Excel for Beginners | Financial Functions | Declining Balance Method for Depreciation | DB ( )
In accounting, the declining balance method ( reducing balance method) is an accelerated depreciation system of recording larger depreciation expenses during the earlier years of an asset’s useful life while recording smaller depreciation during its later years. This technique is useful for recording the depreciation of computers, cell phones, and other high-technology products that rapidly become obsolete.
Syntax:
DB(cost, salvage, life, period, [month])
Cost: The initial cost of the asset.
Salvage: The value at the end of the depreciation (sometimes called the salvage value of the asset).
Life: The number of periods over which the asset is being depreciated (sometimes called the useful life of the asset).
Period: The period for which you want to calculate the depreciation. Period must use the same units as life.
Month: (Optional) The number of months in the first year. If month is omitted, it is assumed to be 12.
Mathematical Formula = (Cost - Accumulated Depreciation from prior periods) x Rate
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