Google Sheets offers four methods to calculate depreciation on your fixed assets. We’ll use the example asset outlined below to compare the different techniques.
Basic information about the fixed asset’s depreciation:
- Asset Cost – 36,000
- Salvage Value – 3,000
- Life – 5 years
|Year||SLN – Straight Line||DB – Declining Balance||DDB – Double Declining Balance||SYD – Sum of the Years Digits|
Highlighted – Highest depreciation expense that year
The three accelerated methods (DB, DDB, and SYD) calculate more expense in the early years, and straight-line (SL) returns more expense later. DDB is slightly faster than DB in this table. However, that difference between the two can be increased or decreased by adjusting the factor used in the DDB formula.
The most common depreciation method for GAAP purposes is the straight-line method. Unless there is a reason to use another method, SLN is the one to pick. As all four techniques are only guesses, there is no reason to make a guess more involved than it needs to be. The depreciation method does not impact the actual purchase price of the asset or its salvage value, just the timing of the expense in your accounting records.
Notice that the declining balance method does not correctly sum to the total cost less salvage value of the asset. These rounding errors could create bookkeeping issues when balancing your depreciation expense schedules.
Live Depreciation Examples in Sheets
Go to this spreadsheet for a live version of the above table that you can study and use anywhere you would like.
See the four depreciation functions and their differences.
Learn about Google Sheet’s four depreciation functions – SLN, SYD, DB and DDB.