The Excel DB Function

Related Function:
DDB Function

Depreciation

When calculating the depreciation of an asset, several different calculations can be used.

One of the most popular methods of calculating depreciation is the Fixed Declining-Balance Method, in which, for each period of an asset's useful lifetime, the calculated value is reduced by a fixed percentage of the asset's value at the start of the period.

The Excel DB Function uses the Fixed Declining Balance Method, using the following constant percentage reduction per period (rounded to 3 decimal places) :

Fixed Declining Balance Rate Equation
where,
  • Salvage is the final value of the asset at the end of its lifetime
  • Cost is the initial cost of the asset
  • Life is the number of periods over which the depreciation occurs

Basic Description

The Excel DB function calculates the depreciation of an asset, using the Fixed Declining Balance Method, for each period of the asset's lifetime.

The format of the function is :

DB( cost, salvage, life, period, [month] )

where the arguments are as shown in the table below:

cost - The initial cost of the asset
salvage - The value of the asset at the end of the depreciation
life - The number of periods over which the asset is to be depreciated
period - The period number for which we want to calculate the depreciation
[month] -

An optional argument that is used to specify a partial year for the first period of depreciation

If the [month] argument is supplied, this should be a integer that specifies how many months of the year are used in the calculation of the first period of depreciation.

The number of months in the last period of depreciation is then calculated as 12 - [month]


Excel DB Function Example 1

In the example below, the DB function is used to find the yearly depreciation of an asset that cost $10,000 at the start of year 1, and has a salvage value of $1,000 after 5 years.

Note that, in this example, the yearly rate of depreciation, calculated from the equation 1-(Salvage/Cost)^(1/Life) is calculated to be 36.9%

 Formulas:
Examples of use of the Excel Db Function
 Results:
Excel Db Function Results

Excel DB Function Example 2

In the example below, the DB function is used with the same cost, salvage and life argument values as in Example 1 above. However, in the following example, the depreciation calculation starts 6 months into year 1.

As the cost, salvage and life arguments are the same as in the previous example, the yearly rate of depreciation, is again calculated to be 36.9%

 Formulas:
Examples of use of the Excel Db Function
 Results:
Excel Db Function Results

Further examples of the Excel DB function can be found on the Microsoft Office website.


DB Function Common Errors

If you get an error from the Excel DB Function, this is likely to be one of the following :

Common Errors
#NUM! - Occurs if either:
- The supplied cost or the supplied salvage argument is < 0
- The supplied life or the supplied period argument is ≤ 0
- The supplied [month] argument is ≤ 0 or is > 12
- period > life (and the [month] argument is omitted)
- period > life+1 (and the [month] argument is supplied and is < 12)
#VALUE! - Occurs if any of the supplied arguments are not numeric values
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