The declining balance method of calculating depreciation accelerates the rate at which an asset loses its value over time. You use the DB function to calculate depreciation with the declining balance method in Excel. The declining balance method lets you capture more depreciation toward the beginning of your asset's economic life.
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- [Voiceover] One of the ways…that governments encourage investment…by businesses is by allowing them to write off…the cost of depreciation of different items…at an accelerated schedule.…For example if you have an item with a seven year life,…in the first year you'll be able…to write off more than 1/7 of its value.…And of course the depreciation goes down as time goes by,…and by year seven there will be practically nothing left,…but you will have gotten the economic benefit…of the depreciation, which you can write off…against your taxes early on.…
One method of accelerated depreciation is called…the declining balance method and in this movie…I will show you how to calculate it.…My sample file is called DecliningBalance_02_02,…and you can find it in the chapter two folder…of the exercise files collection.…So let's assume that we have a $24,000 work station,…which is used for imaging,…it has an economic life of seven years,…which is the amount of time the government figures…you'll be able to use it, and at the end of that time…
- Analyzing loans, payments, and interest
- Calculating depreciation
- Determining values and rates of return
- Calculating bond coupon dates and security durations
- Calculating security prices and yields
- Calculating prices and yields of securities with odd periods
Skill Level Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 24s
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