The Excel DDB Function

Related Function:
DB Function

Double Declining Balance Depreciation

When calculating the depreciation of an asset, it is common to use an accelerated depreciation calculation, in which the calculated value of an asset is reduced by a larger amount during the first period of its lifetime, and smaller amounts during subsequent periods.

One of the most popular accelerated depreciation methods is the Double Declining-Balance Method, in which the straight-line depreciation rate is doubled. A useful example of this is provided on the Wikipedia depreciation page

The Excel DDB function uses the following equation to calculate the depreciation:

DDB Function Equation
where,
  • salvage = final value of the asset at the end of its lifetime
  • value = value of the asset at the start of the period
    (= Initial cost - total depreciation from previous periods)
  • life = number of periods over which the depreciation occurs
  • factor = rate of decline (= 2 for the double-declining balance method)

Basic Description

The Excel DB function calculates the depreciation of an asset, using the Double Declining Balance Method, or another specified depreciation rate.

The format of the function is :

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

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 you want to calculate the depreciation
[factor] -

An optional argument that is used to specify the rate of depreciation

If the [factor] argument is omitted from the function it takes on the default value of 2 (specifying the double declining depreciation method)



DDB Function Example

In the example below, the DDB function uses the double declining depreciation method to calculate 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.

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

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


DDB Function Common Errors

If you get an error from the Excel DDB 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
- Any of the supplied life, period or [factor] arguments are ≤ 0
- period > life
#VALUE! - Occurs if any of the supplied arguments are not numeric values
Return to the Excel Financial Functions Page

Return to the List of All Built-In Excel Functions

Valid XHTML 1.0 Transitional Valid CSS!
Disclaimer   Privacy Policy
Copyright © 2008-2014 ExcelFunctions.net