How to Use the VDB Function in Excel
The VDB function in Excel and Google Sheets is designed to calculate the depreciation of an asset for a specified period using the double-declining balance method. This approach utilizes a depreciation rate that is double that of the straight-line method, applied to the beginning net book value of the asset. “VDB” stands for Variable Declining Balance, allowing users to adjust the depreciation factor in their calculations.
How VDB Works
The syntax for the VDB function remains consistent across both Excel and Google Sheets:
=VDB(cost, salvage, life, start_period, end_period, factor, [no_switch])The parameters are defined as follows:
- cost: The initial purchase price of the asset.
- salvage: The estimated value of the asset at the end of its useful life.
- life: The total number of periods the asset will be depreciated over.
- start_period: The commencement period for the depreciation calculation.
- end_period: The conclusion period for the depreciation calculation.
- factor: The rate at which the depreciation will accelerate, defaulting to 1.
- no_switch: An optional parameter that dictates the method of depreciation; if TRUE or omitted, the function adheres to the double-declining balance method. If set to FALSE, it will switch to the straight-line method once it becomes more advantageous.
Example Scenario
Consider an asset with an initial cost of $10,000, a salvage value of $1,000, a useful life of 5 years, for which we wish to calculate the depreciation from the second to the fourth year, using a factor of 1.5.
| Formula | Result |
|---|---|
=VDB(10000, 1000, 5, 2, 4, 1.5, TRUE) |
$3,600.00 |
The asset’s depreciation from year 2 to year 4 would thus be $3,600.00.
By modifying the parameters within the VDB function, you can tailor the depreciation calculations to meet specific time frames and factors, enhancing your ability to conduct nuanced financial analysis and reporting.
More information: https://support.microsoft.com/en-us/office/vdb-function-dde4e207-f3fa-488d-91d2-66d55e861d73
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