Course outline / Financial functions
Lesson 71 of 75 · Advanced · 4 exercises
Depreciation
Spread an asset's cost over its life with straight-line and declining-balance methods.
What you'll practise
- Straight-line depreciation with SLN
- Faster depreciation with DDB
- The second year
- Value after one year
Straight-line depreciation with SLN
Depreciation spreads the cost of equipment over the years it is used. The simplest method, straight line, takes the same amount each year.
=SLN(cost, value at end, life)
In cell D2, work out the yearly depreciation with SLN.
Faster depreciation with DDB
Double declining balance takes more in early years, when equipment loses value fastest.
=DDB(cost, value at end, life, year)
In cell D2, work out the depreciation for year 1 with DDB.
The second year
In cell D2, work out the year 2 depreciation with DDB.
Value after one year
In cell D2, work out the value after year 1 with straight-line depreciation: B1 minus SLN(B1,B2,B3).
Try it in a real spreadsheet
Every step checks your answer instantly and tells you exactly what to fix.