We need to define the cost, salvage, and life arguments for the SLN function.

Let's create the formula for straight- line depreciation in cell C8 (do this on the first tab in the Excel workbook if you are following along). Our job is to create a depreciation schedule for the asset using all four types of depreciation. Assume that our company has an asset with an initial cost of $50,000, a salvage value of $10,000, and a useful life of five years and 3,000 units, as shown in the screenshot below. Let's go through an example using the four methods of depreciation described so far. Depreciation example with first four functions If it is left blank, Excel will assume the factor is 2 - the straight- line depreciation rate times two, which is double- declining- balance depreciation. The fifth argument, factor, is optional and determines by what factor to multiply the rate of depreciation. The first four ( cost, salvage, life, and period) are required and the same as used in the DB function. The DDB function is used for calculating double- declining- balance depreciation (or some other factor of declining- balance depreciation) and contains five arguments. If it is left blank, Excel will assume there were 12 months in the first year. The optional argument, month, refers to the number of months in the first year. As with per in the SYD function, the unit used for the period must be the same as the unit used for the life e.g., years, months, etc. Period is required and represents the period to calculate the depreciation. The first four arguments are required, and the last one is optional. The DB function is used for calculating fixed declining- balance depreciation and contains five arguments: cost, salvage, life, period, and month. The unit used for the period must be the same as the unit used for the life e.g., years, months, etc. The syntax is =SYD(cost, salvage, life, per) with per defined as the period to calculate the depreciation. The SYD function calculates the sum- of- years' digits depreciation and adds a fourth required argument, per. Those three arguments are the only ones used by the SLN function, which calculates straight- line depreciation. life - useful life of the asset (i.e., how long the asset is estimated to be used in operations).salvage - salvage value of the asset (i.e., the book value of the asset after it is fully depreciated) and.SECTION 1 4 depreciation functions and an exampleĪll four depreciation functions covered in this section have three required arguments in common, as follows:

Other versions of Excel may work differently. Note that the content that follows is based on Microsoft Excel 365 for PCs. You can access the two accompanying videos here and here and a workbook with examples of using the various depreciation methods.

Depreciation spreadsheet for excel