Easy-to-follow video tutorials help you learn software, creative, and business skills.Become a member
Different countries have different methods of calculating depreciation. Excel includes the AMORDEGRC function for use with French accounting rules. In this case you can assign the depreciation coefficient based on the economic life of an asset. So for this function we have the cost argument and that is simply the cost and because we're using French accounting rules I have the currency denomination as Euros. Then we need to know the date the asset was purchased, the end of the first period, then the salvage value in this case 10,000 Euros.
The period for which we're calculating our depreciation, and then the rate, and the rate is something that your accountant will know based on the economic life of the asset. There is a table that's published where you can look at that. And then finally we have the basis, and the basis is how you count days and months in a year. So for example in the US, investment banks typically use a 30-day month and 12 months a year or 360 day a year. In this case option number four is the European method so I've used that as the value for the basis argument.
And with all those arguments in place we can create our formula. So I'll type equal and then the function is AMORDEGRC, left parentheses, and then we have the cost which is in C3, type a comma, the date purchased is in C4, comma, first period, which is again the end of the first depreciation period that's in cell C5. Salvage value is in C6. The period for which we're calculating depreciation is in cell C7, then type a comma, and the rate is in cell C8, comma, and then the basis is in cell C9.
Then we type right parentheses, verify that all of the arguments look to be correct, I believe they are, and then press Tab. When we do, we see that the depreciation for the first year is 31,276 Euros. Now if we change the period to 2 for the second year by typing 2 in cell C7 and then Enter, we see that the depreciation goes down to about 23,500 Euros. When you calculate depreciation, be sure you know which set of rules you're using. If you operate under the French system, you'll probably find that the AMORDEGRC function to be useful.
Get unlimited access to all courses for just $25/month.Become a member
82 Video lessons · 86831 Viewers
80 Video lessons · 136063 Viewers
59 Video lessons · 54789 Viewers
52 Video lessons · 68682 Viewers
Access exercise files from a button right under the course name.
Search within course videos and transcripts, and jump right to the results.
Remove icons showing you already watched videos if you want to start over.
Make the video wide, narrow, full-screen, or pop the player out of the page into its own window.
Click on text in the transcript to jump to that spot in the video. As the video plays, the relevant spot in the transcript will be highlighted.