The fixed declining balance depreciation method is one of the techniques used to depreciate an asset more quickly during the beginning of its life than the end. Unlike under the straight line method, the depreciation expense is not the same for every full period of depreciation. Rather, like its name, the amount of depreciation declines in each successive period.

See a table comparing the different depreciation amounts using different depreciation methods.

Video Explanation

Purpose

To return the value of one period of declining balance depreciation expense.

Syntax

=DB(cost,salvage,life,period,[month])

  • cost - Acquisition cost of the asset. Includes purchase price and costs associated with its acquisition such as freight and sales tax.
  • salvage - Amount that you expect to receive in exchange for the asset at the end of its useful life. This formula will not work with a zero in this field.
  • life - Length of time that the asset is expect to be in service given in number of periods.
  • period - The period for which you are calculating depreciation expense.
  • [month] - OPTIONAL. The number of months in the first year of depreciation if it is not a full year.
  • Note: Be sure that life and period are in the same units (months or years). Only use the [month] option if you are using months for the period and life.

Formulas

DB formula

Examples

Example 1

An automobile is purchased for $40,000 that is expected to last 3 years and be traded-in for $4,000.

ABC
1DataArgumentDescription
2$40,000costacquisition cost
3$4,000salvagemoney back at end of life
43lifenumber of periods for useful life
51periodwhich period the expense is for

FormulaDescriptionResult
=DB(A2,A3,A4,A5)Depreciation expense for first period$21,440
=DB(A2,A3,A4,2)Depreciation expense for second period$9,948
=DB(A2,A3,A4,3)Depreciation expense for final period$4,616

Notice that the three results add up to 36,004 instead of 36,000. Although this difference would be immaterial to a financial statement user, it could cause problems for bookkeepers trying to balance the accounts.

Example 2

A laptop computer is purchased for €3,000 that is expected to last 36 months and is expected to be worth €150 at the end of the three years.

FormulaDescriptionResult
=DB(3000,150,36,11)Depreciation expense for month 11€104

 Live example in Sheets 

Go to this spreadsheeet for a live version of the DB function that you can study and use anywhere you would like.