DDB
Short for Double Declining Balance method. Determines depreciation of asset using declining balance method with a particular coefficient. Usually 2.
Syntax of Excel DDB formula:
=DDB(cost, salvage, life, period, [factor])
In words:
=Calculate depreciation of asset with(this cost, this much expected residual value at the end of life, with this useful life, for this period, [using this coefficient factor])
[factor] argument is optional. If its left out then Excel assumes it to be 2. You can have any coefficient that you desire depending on the nature and and use of asset. Especially the rate at which benefits are being extracted.
Examples of Excel DDB formula
=DDB(1000,100,5,1) will return $400 as depreciation.
In this formula, depreciation for first year is calculated of an asset with cost of 1000, expected residual value to be 100 and useful life of 5 years. As coefficient is omitted so Excel is assuming it to be 2.
=DDB(1000,100,5,1,3) will return $600 as depreciation.