SYD
Sum of Years Digits
Comparison
Comparison of Depreciation Methods
Guide
Depreciation Financial Description Guide
Game
Depreciation Game
🎯 What is Fixed Declining Balance?
The Fixed Declining Balance (DB) method is an accelerated depreciation technique that applies a fixed rate to the declining book value each period. It’s provides higher deductions in the early-years of an asset. It applies a constant rate to a reducing book value each year
=DB(cost, salvage, life, period, [month])
💡 Key Features:
✓ Fixed depreciation rate applied each period
✓ Rate applied to declining book value
✓ Higher depreciation in early years
✓ Optional month parameter for partial first year
✓ Must specify period for each calculation
✓ Fixed depreciation rate applied each period
✓ Rate applied to declining book value
✓ Higher depreciation in early years
✓ Optional month parameter for partial first year
✓ Must specify period for each calculation
⚠️ Important Note: If salvage value is set to $0, the asset will fully depreciate in the first year with the DB method.
Always use a salvage value greater than zero!
🧮 Interactive DB Calculator
Basic Calculator
With Month Option
Example: If purchased in May, enter 8 (May-December = 8 months)
📗 Using Excel’s DB Function
=DB(cost, salvage, life, period, [month])
| Argument | Description |
|---|---|
| cost | Original cost of the asset |
| salvage | Value at end of useful life (must be > 0) |
| life | Useful life in periods |
| period | Specific period to calculate (1, 2, 3…) |
| [month] | Optional: Months in first year (default: 12) |
📚 Exercise 1: Basic DB Method
Equipment costs $50,000, salvage $2,000, life 5 years.
1
Create worksheet: Make a new sheet named “DB”
2
Enter data: Cost in B2, Salvage in B3, Life in B4, Years 1-5 in A7-A11
3
DB Formula in B7:
=DB($B$2,$B$3,$B$4,A7) then press Ctrl+Enter
4
Copy down: Drag B7 through B11
5
Book Value C7:
=B2-B7 (Cost minus first year depreciation)
6
Book Value C8:
=C7-B8 (Previous book value minus current depreciation)
7
Copy down: Drag C8 through C11
📚 Exercise 2: DB with Month Parameter
Bulldozer purchased in May for $75,000, life 5 years, salvage $5,000. Calculate 8 months (May-Dec) for Year 1, then full years.
1
Create worksheet: New sheet named “FDB”
2
Enter data: Cost $75,000 in B2, Salvage $5,000 in B3, Life 5 in B4
3
DB Formula in B7:
The “8” represents 8 months (May through December)
=DB($B$2,$B$3,$B$4,A7,8)
The “8” represents 8 months (May through December)
4
Copy formula: Drag through B12 (6 rows for 5 full years + partial)
5
Book Values: C7:
=B2-B7, C8: =C7-B8, copy down