AMORLINC Excel Formula

The usefulness of Microsoft Excel has gained popularity especially in the business world. This spreadsheet program is widely used in financing and accounting tasks. Excel has lots of functions that have the ability to perform calculations that can be very beneficial particularly in the accounting field. One of these functions is the AMORLINC function. A good way to start learning about this function is to know the basics and some examples that will help you learn more about its usage. So, what is AMORLINC function in Excel?

Overview of the AMORLINC Function in Microsoft Excel

The AMORLINC function in Excel is used to calculate an asset’s prorated linear depreciation for every accounting period. This function has been brought into Excel for the French accounting system users. The formula of the AMORLINC function is:

AMORLINC( cost, date_purchased, first_period, salvage, period, rate, [basis])

The arguments in this formula are the following:

  • Cost – This argument refers to the cost of the asset.
  • Date_purchased – The date when the asset was purchased
  • First_period – The date when the first period will end
  • Salvage – This argument refers to the salvage value, at the end of the lifetime of the asset.
  • Period – It indicates the period over which the depreciation is to be computed.
  • Rate – The asset’s rate of depreciation
  • [basis] – This is an optional argument. It indicates the day count basis that will be used in the computation. The following are the possible values of this argument and their meaning:

        0 (or omitted) – US (NASD) 30/360

  •         actual/actual
  •          actual/360
  •          actual/365
  •          European 30/360

You have to take note that the first_period and the date_purchased arguments can be supplied in the formula as either of the following:

  • Dates that are returned from other formulas or functions
  • Cell references which contain the dates

If the date arguments are supplied as text, there is a possibility that this may not be interpreted by Excel because of different date interpretation settings and date systems.

Even though you can also supply the dates as serial numbers, this is not advisable because serial numbers differ across various computer systems.

Here is an example for a better understanding about the usage of the AMORLINC function. The purchase date of the asset is 01-Jan-2011, at a cost of $150 and the end date of the first period is on 30-Sep-2011. The asset has a salvage value of $20 and depreciates at a rate of 20% per year. The day count basis that is used is the US (NASD) 30/360.

If you use the AMORLINC function formula and supply the values that were given above, the function will return the result which is 30. It means that the asset depreciates by $30.00 during the first period.

Common Errors in the AMORLINC Function

  • #NUM! – This result is displayed if either the first_period is lower than the date_purchased, or the cost is less than the supplied salvage value, or if supplied numbers for the basis, rate, period and salvage arguments are not valid.
  • #VALUE! – This result is displayed if either the invalid dates are supplied for the first_period and date_purchased arguments, or if any of the supplied arguments are not a numeric value.
  • #NAME? – This result is displayed when the Analysis ToolPak add-in is not activated in your Excel spreadsheet.

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