# DDB – Double Declining Balance Depreciation

You use the double-declining balance depreciation (DDB) method 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 depreciation period. Instead, the depreciation expense declines in each successive period like its name.

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

## Purpose

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

## Syntax

`=DDB(cost,salvage,life,period,[factor])`

• `cost` – Acquisition cost of the asset. The acquisition cost includes the purchase price and costs associated with its acquisition, such as freight and sales tax.
• `salvage` – Amount you expect to receive in exchange for the asset at the end of its useful life. Typically, this is zero. An example of a case where this is not zero is an automobile’s expected trade-in value.
• `life` – Length of time you expect the asset to be in service. You specify this value using the number of periods.
• `period` – The period for which you are calculating depreciation expense.
• `[factor]` – OPTIONAL. A factor used to increase depreciation instead of the default value of 2. Use this to increase or decrease the depreciation rate with a higher number making the earlier amounts larger. If you do not specify a factor, it is the same as entering a 2.
• Note: Be sure that `life` and `period` are in the same units (months or years).

## Examples

### Example 1

You purchase an automobile for \$40,000 that you expect to last three years and have a trade-in value of \$4,000.

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

You purchase a laptop computer for €3,000 and expect it to last 36 months. You expect it to be worth €150 at the end of the three years.