Asset Depreciation Formulas (SLN & DB)
Learn how to calculate asset depreciation in Excel using SLN, DB, and DDB. Compare straight-line and accelerated methods for corporate tax and asset schedules.
Corporate controllers and tax strategists systematically allocate the cost of physical assets over their productive operational lifespans. Whether amortizing delivery vehicles, factory equipment, or computer servers, depreciation serves as both an expense on the income statement and a critical non-cash tax shield.
The method chosen directly affects early-year profitability, tax burdens, and reported asset book values. Excel provides three dedicated depreciation formulas: SLN, DB, and DDB.
Quick Comparison: Depreciation Methods
| Formula | Depreciation Method | Trajectory Across Asset Life | Corporate Strategy Goal |
|---|---|---|---|
SLN(cost, salvage, life) |
Straight-Line | Constant expense every single year | Stable net earnings for public shareholder reporting. |
DB(cost, salvage, life, period) |
Fixed-Declining Balance | Higher early expense, decreasing over time | Tax optimization with fixed rate percentage. |
DDB(cost, salvage, life, period, [factor]) |
Double-Declining Balance | Aggressively accelerated in Year 1 & 2 | Maximizing tax deductions while asset is brand new and productive. |
The Salvage Value Floor
Under accelerated methods like DDB, Excel automatically caps depreciation so that an asset's book value never drops below its stated salvage value. Once the book value reaches the salvage floor, annual depreciation stops automatically.
Hands-on Practice Playground
Use the equipment asset schedule below to compare straight-line, declining-balance, and double-declining depreciation. Follow each objective to complete the exercise.
In cell D2, calculate the constant annual depreciation using SLN.
In cell D2, calculate the fixed straight-line depreciation for Year 1 using the SLN formula with initial cost $B$2, salvage value $B$3, and useful life $B$4.
In cell E2, calculate Year 1 declining depreciation using DB.
In cell E2, calculate the fixed-declining balance depreciation for Year 1 (period C2) using the DB formula with cost $B$2, salvage $B$3, and life $B$4.
In cell F2, calculate Year 1 accelerated depreciation using DDB.
In cell F2, calculate the accelerated double-declining depreciation for Year 1 (period C2) using the DDB formula with cost $B$2, salvage $B$3, life $B$4, and factor 2.
Ready to apply Asset Depreciation Formulas (SLN & DB) in a real workbook?
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