DB Excel Formula

Author Zaheer    Category Formulas     Tags , ,

DB function in the Excel denotes “declining balance”. This function uses the method of fixed declining balance to find out the depreciation of an asset. According to the method of assets depreciate at fixed rates. Excel is enriched with many useful functions, which will help the users or the administrators to make the database program more user-friendly. The Declining Balance DB function will help to calculate the depreciation of the assets if the syntax of the function is properly maintained. The DB function syntax is as follows -

DB (cost,salvage,life,period,month)

All the rules of the syntax should be maintained accurately to calculate the accurate result. So, when a function will be applied in a database, it should be properly defined even a comma is also important here. In the syntax of the function DB, cost denotes the asset’s initial cost; salvage denotes the value that will be at the end of depreciation (it is also called as the asset’s salvage value); life denotes number of periods at which the asset will be depreciated (sometimes it is called as the asset’s useful life); period denotes the period that you want for calculating the depreciation; and month denotes the number of the months in the 1st year. It should be stated that the period and the life should use the same unit. If the month is not stated there, then it will be assumed as 12.

Some remarks are given here. The method of the fixed declining balance calculates the depreciation at fixed rates. For the calculation of a depreciation over a period following formula is used by the DB function — “(cost – total depreciation from prior periods) * rate”. Here rate is equal to “1 – ((salvage/cost) ^ (1/life))” the result is considered up to 3 decimal places. The first period’s depreciation and the last period’s depreciation is considered as special case. Following formula is used by the DB function to find out the first period’s depreciation – “cost * rate * month/12”.  And following formula is used by the DB function to find out the last period’s depreciation – “((cost – total depreciation from prior periods) * rate * (12 – month))/12”. Syntax is very important for a function. If any of the terms or operators are not used properly, accurate result will not be achieved.

An example may help you to understand the function easily. Consider the initial cost is 1000000, salvage value is 100000, and lifetime in years is 6. If only seven months is calculated. Then in the depreciation in the first year will be 186083.33. The depreciation in the second year will be 259639.42. The depreciation in the fourth year will be 120410.64. The depreciation in the 6th year will be 55841.76. In this process the DB function will find out the value for your database. For many assets, to find out the values will need days of time, if you have to calculate manually. The DB function will calculate them within moments with more accuracy. In the Excel software several functions can be used together to find out more complex result.

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