How to use the Excel DDB function

Summary

The Excel DDB function returns the depreciation of an asset for a given period using the double-declining balance method or another method you specify by changing the factor argument.

Purpose

Depreciation - double-declining

Return value

Depreciation in given period

Syntax

=DDB (cost, salvage, life, period, [factor])

Arguments

cost - Initial cost of asset.
salvage - Asset value at the end of the depreciation.
life - Periods over which asset is depreciated.
period - Period to calculation depreciation for.
factor - [optional] Rate at which the balance declines. If omitted, defaults to 2.

Usage notes

The DDB function calculates the depreciation of an asset for in a given period using the double-declining balance method. The double-declining balance method computes depreciation at an accelerated rate – depreciation is highest in the first period and decreases in each successive period. To calculate depreciation, the DDB function uses the following formula:

=MIN((cost-pd)*(factor/life),(cost-salvage-pd))

where pd = total depreciation in all prior periods.

The factor argument is optional and defaults to 2, which specifies the double-declining balance method. You can change factor to another value to influence the rate of depreciation. This is why DDB is sometimes defined as "double-declining method or other method". In the example shown, the formula in D7. copied down, is:

=DDB(cost,salvage,life,B7)

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