Related Function:

The DDB function calculates the depreciation of an asset for a given time period based on the double-declining balance method (see note below).

### Syntax

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

#### Arguments

Argument Description
cost The original cost of the asset
salvage The salvage value after the asset has been fully depreciated
life The useful life of the asset or the number of periods that you will be depreciating the asset
period The period that you wish to calculate the depreciation for. Use the same units as for the life
[factor] Optional. The rate at which the balance declines

 • If [factor] is omitted, it will assume the [factor] to be 2, specifying the double declining depreciation method

#### Examples

The following spreadsheet shows the DB function is used to calculate the annual 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. [factor] is omitted from the function and assumes a value of 2.

A B C D E
1 Data
2 $10,000 Initial cost 3$1,000 Salvage value
4 5 Life
5 2 Factor
6
7 Year Formula Result EOP Value Accumulated Depreciation
8 1 =DDB(10000,1000,5,1) $4,000.00$6,000.00 $4,000.00 9 2 =DDB(A$2,A$3,A$4,A9) $2,400.00$3,600.00 $6,400.00 10 3 =DDB(A$2,A$3,A$4,A10) $1,440.00$2,160.00 $7,840.00 11 4 =DDB(A$2,A$3,A$4,A11) $864.00$1,296.00 $8,704.00 12 5 =DDB(A$2,A$3,A$4,A12) $296.00$1,000.00 \$9,000.00

Note: The annual rate of depreciation in example above, calculated from the equation 1-(Salvage/Cost)^(1/Life), is calculated to be 40.0% for years 1-4 years, then 22.8% for the 5th year.

#### Common Function Error(s)

Problem What went wrong
#VALUE! Occurs if any of the supplied arguments are not numeric values
#NUM! Occurs if:

 • the cost or the salvage argument is < 0 • any of the supplied life, period or [factor] arguments are ≤ 0 • period > life

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:

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)