Returns the depreciation of an asset for a given year using the double (or other factor) declining-balance method.
Syntax:
DDB(originalcost, salvagevalue, lifetime, year, factor)
originalcost: the initial cost of the asset.
salvagevalue: is the value at the end of the depreciation (sometimes called the salvage value of the asset).
lifetime: the number of years over which the asset is being depreciated.
year: the year number for which the depreciation is calculated.
factor: the factor to set the depreciation rate (2 if omitted).
To calculate depreciation, DDB uses a fixed rate. When factor = 2 this is the double-declining-balance method (because it is double the straight-line rate that would depreciate the asset to zero). The rate is given by:
rate = factor / lifetime.
The depreciation each year is calculated as
MINIMUM( book_value_at_start_of_year * rate; book_value_at_start_of_year - salvagevalue )
Thus the asset depreciates at rate until the book value is salvagevalue.
Example: