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Excel Function Dictionary 1998 - 2000 Peter Noneley A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 B C D E F G H

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DB
Purchase Price : Life in Years : Salvage value : Year 1 2 3 4 5 Total Depreciation : 5,000 5 200 Deprecation 2,375.00 1,246.88 654.61 343.67 180.43

=DB(E3,E5,E4,D8) =DB(E3,E5,E4,D9) =DB(E3,E5,E4,D10) =DB(E3,E5,E4,D11) =DB(E3,E5,E4,D12)

4,800.58 * See example 4 below.

What Does It Do ? This function calculates deprecation based upon a fixed percentage. The first year is depreciated by the fixed percentage. The second year uses the same percentage, but uses the original value of the item less the first years depreciation. Any subsequent years use the same percentage, using the original value of the item less the depreciation of the previous years. The percentage used in the depreciation is not set by the user, the function calculates the necessary percentage, which will be vary based upon the values inputted by the user. An additional feature of this function is the ability to take into account when the item was originally purchased. If the item was purchased part way through the financial year, the first years depreciation will be based on the remaining part of the year. Syntax =DB(PurchasePrice,SalvageValue,Life,PeriodToCalculate,FirstYearMonth) The FirstYearMonth is the month in which the item was purchased during the first financial year. This is an optional value, if it not used the function will assume 12 as the value. Formatting No special formatting is needed. Example 1 This example shows the percentage used in the depreciation. Year 1 depreciation is based upon the original Purchase Price alone. Year 2 depreciation is based upon the original Purchase Price minus Year 1 deprecation. Year 3 deprecation is based upon original Purchase Price minus Year 1 + Year 2 deprecation. The % Deprc has been calculated purely to demonstrate what % is being used. Purchase Price : Salvage value : Life in Years : 5,000 1,000 5

Excel Function Dictionary 1998 - 2000 Peter Noneley A 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 B C D Year 1 2 3 4 5 E F Deprecation 1,375.00 996.88 722.73 523.98 379.89 =DB(E47,E48,E49,D56) 3,998.48 G % Deprc 27.50% 27.50% 27.50% 27.50% 27.50% H

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Total Depreciation :

Example 2 This example is similar to the previous, with the exception of the deprecation being calculated on a monthly basis. This has been done by multiplying the years by 12. Purchase Price : Life in Years : Salvage value : Month 56 57 58 59 60 5,000 5 100 Deprecation 8.79 8.24 7.72 7.23 6.78 =DB(E66,E68,E67*12,D75)

Example 3 This example shows how the length of the first years ownership has been taken into account. Purchase Price : Life in Years : Salvage value : First Year Ownership In Months : Year 1 2 3 4 5 5,000 5 1,000 6 Deprecation 687.50 1,185.94 859.80 623.36 451.93 =DB(E74,E76,E75,D84,E77) 3,808.54 % Deprc 13.75% 27.50% 27.50% 27.50% 27.50%

Total Depreciation :

Why Is The Answer Wrong ? In all of the examples above the total depreceation may not be exactly the expected value. This is due to the way in which the percentage value for the depreceation has been calculated by the =DB() fumction.

Excel Function Dictionary 1998 - 2000 Peter Noneley A 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 B C D E F G H The percentage rate is calculated by Execl using the formula = 1 - ((salvage / cost) ^ (1 / life)). The result of this calculation is then rounded to three decimal places. Although this rounding may only make a minor change to the percentage rate, when applied to large values, the differnce is compounded resulting in what could be considered as approximate values for the the depreceation. Example 4 This example has been created with both the Excel calculated percentage and the 'real' percentage calculated manually. The Excel Deprecation uses the =DB() function. The Real Deprecation uses a manual calculation. This is the 'real' deprecation percentage, calculated manually : 27.522034% =1-((E117/E116)^(1/E118)) Purchase Price : 5,000 = 1 - ((salvage / cost) ^ (1 / life)). Salvage value : 1,000 Life in Years : 5 Excel Deprecation 1,375.0000 996.8750 722.7344 523.9824 379.8873 3,998.48 Real Depreciation 1,376.1017 997.3705 722.8739 523.9243 379.7297 4,000.00 1.52

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Year 1 2 3 4 5 Total Depreciation :

Excel % Deprc 27.500% 27.500% 27.500% 27.500% 27.500%

Error difference :