# How to Create a Declining Balance

In this Excel lesson you will learn yourself how to calculate Declining Balance Depreciation.

## Data preparation

The asset:

• it is 1 million of dollars worth
• salvage value is \$750 000
• life of the asset is 10 years To calculate a reducing balance we will use DB Excel formula.

## Formula syntax

Syntax of Declining Balance Excel formula is:

• cost
• salvage
• life
• period

Luckily, we already have all data we need.

## Declining Balance Calculations

To calculate yearly depreciation use =DB(\$C\$4,\$C\$5,\$C\$6,C9) formula. Absolute reference is needed because the data will not change in the table. Only the last arguments changes because it is the value of the year.

Cumulative depreciation is just =C11+D10. Drag it right to calculate all of them. This is just a current year value plus sum of previous ones. Deprecated value is =\$C\$4-C11 which is the starting value reduced by cumulative depreciation. This is Declining Balance formula and the easiest way to calculate Declining Balance Depreciation in Excel.