The Most Versatile Depreciation Method!
What is Variable Declining Balance (VDB)?
VDB is the most versatile and advanced depreciation method. It combines declining balance with automatic switching to straight-line when beneficial, ensuring you always reach exactly zero or salvage value!
Why VDB is Superior:
- Always accurate: Depreciates exactly to zero or salvage value
- Intelligent switching: Automatically switches to straight-line when optimal
- Flexible periods: Calculate depreciation for any time period
- Custom factors: Use any factor (default is 2 for double-declining)
- Full control: Option to disable automatic switching
=VDB(cost, salvage, life, start_period, end_period, [factor], [no_switch])
📗 VDB Function Arguments
| Argument | Description |
|---|---|
| cost | Original cost of the asset |
| salvage | Value at end of useful life |
| life | Useful life in periods (years, months, etc.) |
| start_period | Beginning of period to calculate (must match life units) |
| end_period | End of period to calculate (must match life units) |
| [factor] | Optional: Depreciation rate (default: 2 for DDB) |
| [no_switch] | Optional: TRUE = stay declining, FALSE = switch to straight-line (default: FALSE) |
Period Examples for 5-Year Asset:
=VDB(80000,4000,5,0,1) – Year 1 (period 0 to 1)
=VDB(80000,4000,5,1,2) – Year 2 (period 1 to 2)
=VDB(80000,4000,5,2,3) – Year 3 (period 2 to 3)
Note: Start_period begins at 0, not 1!
=VDB(80000,4000,5,0,1) – Year 1 (period 0 to 1)
=VDB(80000,4000,5,1,2) – Year 2 (period 1 to 2)
=VDB(80000,4000,5,2,3) – Year 3 (period 2 to 3)
Note: Start_period begins at 0, not 1!
Flexible Time Periods
VDB works with ANY time unit – just keep it consistent!
Monthly Example: =VDB(100000,5000,60,0,3)
Calculates first 3 months for asset with 60-month life
🧮 Interactive VDB Calculator
2 = Double Declining, 1.5 = 150% Declining, 1 = Standard Declining
⚖️ VDB Comparison: With vs Without Switching
See how the no_switch parameter affects depreciation:
📝 Step-by-Step Practice Tutorial
This practice demonstrates the difference between setting no_switch to TRUE versus FALSE. You’ll create two columns to compare both methods side-by-side.
- Create a new worksheet named VDB.
- Enter the data:
- Cell B1: 80000 (Cost)
- Cell B2: 4000 (Salvage)
- Cell B3: 5 (Life)
- Cells A6-A10: 1, 2, 3, 4, 5
- Cell B5: “No Switch = TRUE”
- Cell C5: “No Switch = FALSE”
- In cell B6:
Type=VDB($B$1,$B$2,$B$3,A6-1,A6,2,TRUE)
Press Ctrl + Enter - Drag B6 down through B10
- In cell C6:
Type=VDB($B$1,$B$2,$B$3,A6-1,A6)
Press Ctrl + Enter - Drag C6 down through C10
- Sum cells B11 and C11
- Compare: FALSE reaches $76,000 exactly!
🎓 Advanced VDB Features
Custom Factor:
=VDB(100000,5000,5,2,3,1.5)
150% declining for Year 3
=VDB(100000,5000,5,2,3,1.5)
150% declining for Year 3
Monthly:
=VDB(100000,5000,60,0,3)
First 3 months of 60-month life
=VDB(100000,5000,60,0,3)
First 3 months of 60-month life
Quarterly:
=VDB(50000,2000,20,0,4)
First 4 quarters of 20-quarter life
=VDB(50000,2000,20,0,4)
First 4 quarters of 20-quarter life