# VDB Function

Get the depreciation of an asset using the Double Declining Balance method

Get the depreciation of an asset using the Double Declining Balance method

The VDB Function is a Financial function that calculates the depreciation of an asset using the Double Declining Balance (DDB) method or some other method specified by the user. VDB is a short form of **V**ariable **D**eclining **B**alance.

The Excel VDB function also allows us to specify a factor to multiply the Straight-Line Depreciation by, although the function uses the DDB method by default. It will help a financial analyst in building financial models or creating a fixed asset depreciation schedule for analysis.

**=VDB(cost, salvage, life, start_period, end_period, [factor], [no_switch])**

The VDB function uses the following arguments:

**Cost**(required argument) – It is the initial cost of the asset.**Salvage**(required argument) – It is the value of an asset at the end of the depreciation. It can be zero. It is also known as the salvage value.**Life**(required argument) – It is the useful life of the asset or the number of periods for which the asset will be depreciated.**Start_period**(required argument) – It is the starting period for which you want to calculate the depreciation. Start_period must use the same units as life.**End_period**(required argument) – It is the ending period for which you want to calculate the depreciation. End_period must use the same units as life.**Factor**(optional argument) – It is the rate of depreciation. If we omit the argument, the function will take the default value of 2, which denotes the double declining method.**No_switch**– It is an optional logical argument that specifies whether the method should switch to straight-line depreciation when depreciation is greater than the declining balance calculation. Possible values are:- TRUE – Excel will not switch to the straight-line depreciation method;
- FALSE – Excel will switch to the straight-line depreciation method when depreciation is greater than the declining balance calculation.

To understand the uses of the VDB function, let us a consider a few examples:

Assuming we wish to calculate the depreciation for an asset with an initial cost of $500,000 and a salvage value of $50,000 after 5 years.

We will calculate the depreciation for one day, one month and one year. The formula used in calculating depreciation for a day is:

We get the result below:

The formula used in calculating depreciation for a month is:

We get the result below:

The formula used in calculating depreciation for a year is:

We get the result below:

In the formulas above, we did not provide the factor argument so Excel assumed it as 2 and used the DDB method. Excel also assumed the no_switch argument as FALSE.

- We need to provide arguments “period” and “life” in the same units of time: years, months or days.
- All arguments except no_switch must be positive numbers.
- #VALUE! error – Occurs when the given arguments are non-numeric.
- #NUM! error – Occurs when:
- Any of the supplied cost, salvage, start_period, end_period or [factor] arguments are < 0;
- The given life argument is less than or equal to zero;
- The given start_period is > the given end_period; and
- Start_period > life or end_period > life.

**Click here to download the sample Excel file**

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