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

## Data preparation

We are having data about an asset in your balance sheet.

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.

You can download the spreadsheet from my GitHub account.

The difference between straight line depreciation and declining balance is that for straight line depreciation yearly depreciation is the same value and for declining balance it is different (based on percentage).