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VDB

The VDB function in Google Sheets is used to calculate the depreciation of an asset for a specific period or partial period. By providing the cost, salvage value, asset life, start period, end period, and optional factor, this function allows for efficient depreciation calculations.

Function Syntax and Parameters

Syntax: VDB(cost, salvage, life, start_period, end_period, [factor], [no_switch])

Parameters:

  • cost: The initial cost of the asset.
  • salvage: The value of the asset at the end of its life.
  • life: The total number of periods over which the asset will depreciate.
  • start_period: The starting period for which depreciation is calculated.
  • end_period: The end period for which depreciation is calculated.
  • factor: [Optional] The rate at which depreciation occurs. Defaults to 2 (double-declining balance method).
  • no_switch: [Optional] A logical value indicating whether to switch to straight-line depreciation after the end of the declining balance period. Defaults to FALSE.

Step-by-Step Tutorial

NOTE: To calculate depreciation, the asset's life must be specified. Additionally, the periods must be consecutive, with each period counted as one.

  1. Calculate depreciation for a specific period:

    • Example: =VDB(10000, 1000, 5, 1, 3, 2)
    • Result: The depreciation for periods 1 to 3 of an asset with a $10,000 cost, $1,000 salvage value, 5-year life, and a double-declining balance factor of 2.

  2. Switch to straight-line depreciation using no_switch:

    • Example: =VDB(10000, 1000, 5, 1, 10, 2, TRUE)
    • Result: Calculation of depreciation for periods 1 to 10 using double-declining balance method, followed by straight-line depreciation from period 11 onwards.

Use Cases and Scenarios

  1. Asset Depreciation: Track the value decrease of a company's fixed assets over time.
  2. Financial Planning: Determine the impact of asset depreciation on financial statements.
  3. Capital Budgeting: Calculate the depreciation for investment analysis and cash flow projections.

Related Functions

  • DDB: Calculate depreciation using the fixed-declining balance method.
  • SLN: Calculate straight-line depreciation for an asset.
  • SYD: Calculate depreciation using the sum-of-years' digits method.

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