From the course: Excel: Financial Functions in Depth

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DB: Calculate depreciation using the declining balance method

DB: Calculate depreciation using the declining balance method - Microsoft Excel Tutorial

From the course: Excel: Financial Functions in Depth

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DB: Calculate depreciation using the declining balance method

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- [Instructor] As we've discussed, straight-line depreciation is exactly the same for each period over the life of the asset. However, sometimes we need to accelerate that depreciation amount. Instead of depreciating it evenly, we're going to take more depreciation at the beginning and reduce it as we go along. This is called a declining balance depreciation method, and the DB function we're going to look at first calculates it on a fixed declining balance basis. So we might do this if we expect to gain more revenue from the asset in the first couple of years, or it could be that if we take more depreciation at the beginning of an asset's life, though that money is worth more, as inflation eats away at the value of money, so dollars in later years would be worth less than values in earlier years. If you take more depreciation at the beginning of an asset's life, then that money is worth more in effective dollars. Let's take a look now at how to calculate fixed declining balance…

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