VDB Excel Formula

Author Zaheer    Category Formulas     Tags ,

The common professions that benefits in utilizing Microsoft Excel program are engineers and accountants. As everyone knows, most of their jobs involve computation. So, for them to easily do their tasks most of them utilize the program and it provided them immense help. However, in order to take advantage of what this program can offer, the user must know and distinguish its different functions. Continue reading this article for you to be aware of what it can help you or any professional or business as it talks about the VDB function.

VDB Function Description

VDB is just an acronym for variable declining balance. The function is considered an extension of the function DDB. The function is used to compute the depreciation of a certain asset in any point in time that include partial period through the use of double declining method or any other required depreciation rate.

VBD Function Formula

To have accurate use of formula in the process of computation:

=VDB(cost, salvage, life, start_period, end_period, [factor], [no switch])

To understand more the formula listed below are its arguments:

  • cost – this is the asset initial cost
  • salvage – this is the value during depreciation end, there are cases that it is called as the asset salvage value
  • life – this is the amount of periods when the asset should depreciate. There are times that it is called the useful asset life.
  • start_period – this is the starting time when to compute the depreciation. It is a prerequisite that the unit used must be similar to the unit used in asset life.
  • end_period – this is the end duration when to compute depreciation. The same with start_period, it must use the same unit with life.
  • factor – refers to the rate when the balance will decline. In case there’s no value written, Excel will automatically assume that the value is equal to two, which means double declining balance method.
  • no_switch – this is a rational value that tells whether to change to straight line depreciation once the value of depreciation is higher compared to the value of the computed declining balance. Once the value of no_switch is TRUE, Excel will not shift to straight line method but once it is FALSE then Excel will change to straight line depreciation method, in accordance to the condition specified above.

Any user should take notice of this important reminder that the entire argument should be in positive integer except the no_switch.

VDB Function Example

What is the depreciation value of an asset costing $15,000 at the beginning of year 1 and will have $1,500 salvage value after 5 years.

From that problem, the given figures are:

cost – $15, 000

salvage – $1,500

life – 5

start_period – 0, 1 and 3

end_period – 1, 3 and 5

To use Excel to the given problem, do the following procedures:

  • Input the data on the worksheet.
  • Since, there are three starts and end period, the process should be done three times.
  • Click on the cell to appear the answer and from that cell input the VDB syntax.
  • The first cell will have the answer $6,000, the second cell will have the answer $5,760 and the last cell has the answer 1, 740.
  • Sum up all the answer and it is equal to $13,500.
  • Subtract the answer from the cost and the answer is Depreciation which is equal to $1, 500.

In this kind of function, you need to analyze first before you input data. Since, the function use double declining method, the asset depreciates after 2 years. So, in the computation finding for the cost of depreciation was done three times and was summed up and subtracted from the real cost in order to find the actual depreciation value.

 

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