How to Use the DDB Function in Excel

Welcome to the tutorial on how to use the DDB function in Excel and Google Sheets. This function is designed to compute depreciation using the double-declining balance method. It provides a way to evaluate how much an asset has depreciated over a specified period within its effective lifespan.

Syntax

The syntax for the DDB function is:

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

cost: The initial cost of the asset.
salvage: The value of the asset at the end of its useful life.
life: The total number of periods over which the asset will be depreciated.
period: The period for which the depreciation calculation is required.
factor: (Optional) The multiplier for accelerating the depreciation rate (default value is 2, which indicates the double-declining balance).

Examples

Below are examples that illustrate how to apply the DDB function:

Example 1 – Basic Usage

Consider an asset with an initial cost of $10,000, a salvage value of $1,000, a useful life of 5 years, and the task is to calculate the depreciation for the second year.

Cost	Salvage	Life	Period	Depreciation for Year 2
$10,000	$1,000	5	2	=DDB(10000, 1000, 5, 2)

The result indicates the depreciation amount for the second year calculated using the double-declining balance method.

Example 2 – Custom Factor

To use a custom factor, such as 1.5, you can include it as the final argument in the function.

For instance, to calculate the depreciation of an asset costing $8,000, with a salvage value of $500, a useful life of 4 years, for the third year using a 1.5 acceleration factor:

Cost	Salvage	Life	Period	Factor	Depreciation for Year 3
$8,000	$500	4	3	1.5	=DDB(8000, 500, 4, 3, 1.5)

This result shows the depreciation value for the third year with the specified acceleration factor.

Using the DDB function allows for precise depreciation calculations of assets based on the double-declining balance method in both Excel and Google Sheets.

More information: https://support.microsoft.com/en-us/office/ddb-function-519a7a37-8772-4c96-85c0-ed2c209717a5

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