Calculating Depreciation of assets in Excel – How to

In accounting world depreciation is one key calculation to be done for every period to make the reports and is also an important part of financial management decision making process in some cases. However, depreciation calculations can sometimes be tedious and long if we have to do it for multiple classes of assets for multiple years. It gets even more complex if entity has different depreciation policies for different assets under different circumstances.

However, excel can lend us big help in making depreciation calculation super fast, easy and accurate as well. In Excel you can not only make your own formula to calculate depreciation but in recent versions Excel has dedicated depreciation functions to calculate depreciation expense. Combining amortization and depreciation methods in Excel 2010 version we have 7 dedicated formula/functions for this purpose under the category financial.

Following is the list of depreciation functions in Excel:

  1. AMORDEGRC – Short for AMORtissement DEGRessif Comptabilite. This is a french name for French reducing balance amortization/depreciation method. It is a french method and due to the same reason excel has used french base to name this function. >>> Jump straight to this method
  2. AMORLINC – Short for AMORtissement LINeaire Comptabilite. This is a french name for French straight line amortization/depreciation method. It is a french method and due to the same reason excel has used french base to name this function. It is slightly different from regular straight-line depreciation method. To learn the difference read: What is french straight line method of depreciation? >>> Jump straight to this method
  3. DB – Short for Declining Balance method of depreciation. Also known as reducing balance method. >>> Jump straight to this method
  4. DDB – Short Double Declining Balance method of depreciation. A variant of simple declining balance method with a difference that depreciation coefficient is usually 2 but it can be any other number. To learn more about double declining balance method of depreciation read: What is Double declining balance method of depreciation? >>> Jump straight to this method
  5. SLN – Short for Straight-LiNe method of depreciation >>>Jump straight to this method
  6. SYD – Short for Sum of Years Digits method of depreciation >>> Jump straight to this method
  7. VDB – Variable Declining Balance method of depreciation. Also known as declining balance to straight line crossover method. To learn in detail how this method works read: What is ‘Declining balance to Straight line crossover’ method of depreciation? >>> Jump straight to this method

Calculating depreciation in Excel – Things you need

For all of the seven methods listed above you need following three pieces of information. Although each formula has its own information requirement which we will discuss with each formula but the following three are common in all the excel depreciation formula:

  1. Cost of the asset; is the cost at which asset is purchased and made available for intended use. Remember in accounting cost of asset is not only the cost you paid at the time of purchase.
  2. Salvage or scrap or residual value of asset; is the value which is expected that asset will bring when it is ultimately scrapped at the end of its useful life. Remember it is an estimate at the time of purchase.
  3. Life or useful life of asset; the time period for which asset is expected to stay in service.
Well you are all covered with us and you do not have to think of any information on your own to feed the formula you are going to learn. Download this excel file and follow the steps for each method to practice these formula. Or more conveniently you can use live worksheets right inside the page to practice the formula. So lets Start! 🙂