# Depreciation - DDB Double Declining Balance Method

The DDB(double-declining balance) function computes depreciation at an accelerated rate.  Depreciation is highest in the first period and decreases in successive periods.

The Syntax for the DDB function
` = DDB(cost, salvage, life, period, [factor])`

Argument    Description
Cost The original cost of the asset
Salvage The value of the asset at the end of its expected useful life
Life The useful life of the asset. It is the number of periods over which the asset is being depreciated
Period The period for which you want to calculate the depreciation.
[Factor] Optional – The rate at which the balance declines. If not used the default is 2.

## Practice for using the Double Declining Balance Method

A piece of equipment cost \$12,000, has a salvage value of \$2,000 and a useful life of 5 years. You will compute the amount of depreciation for each of the 5 years and the Book value. The book value of an asset is the Cost of the asset minus its accumulated depreciation.
1. Create a new worksheet named DDB.
2. Enter the worksheet data as shown below.  Format cell B2 and the cell range B7:D11 using the Accounting format. 3. In cell B7 start the formula by typing `=DDB(`.
Excel’s intellisense displays the list of arguments. 4. The cost is \$12,000. Type B2.  Press F4 to make the address absolute.  Enter a comma to separate the argument.
Type B3 for the salvage value and then Press F4.  Enter a comma.
Type B4 for the life and then Press F4.  Enter a comma.
Type A7 for the period and then Press Ctrl + Enter.
Drag the AutoFill handle on cell B7 down through cell B11.
5. The Accumulated Depreciation for the first year is the same as the depreciation for the first year.
Enter `=B7` in cell C7 then press Enter.
The Accumulated Depreciation for the following years is computed as the Accumulated Depreciation up to this time, plus the Depreciation for the current year.
Enter `=C7 + B8` in cell C8.
Using the AutoFill handle, drag down through cell C11.
6. The Book Value is the Cost of the Asset minus the Accumulated Depreciation.
Enter ` =\$B\$2-C7` in cell D7 then press Ctrl + Enter.
Using the AutoFill handle, drag down through cell D11.

7. Press Ctrl + ~ to view your formulas.  They should appear as those below.
8. Results: *NOTE: The Book Value for the last year of asset depreciation may not come out exactly to the salvage value when using the Fixed Declining Balance or Double Declining Balance methods. This may be acceptable or you may need to change the formula or adjust the ending entry. There is a declining balance that will come out exactly to the salvage value or 0 if there is no salvage value and that is the VDB (Variable Declining Balance) method.  There is a menu item that will take you to the VDB depreciation method at the top of this web page.