Financial Functions
Advanced

Book value after two years of DB

Cost minus each year's depreciation so far.

Task:

A vehicle cost 24,000, with a salvage value of 4,000 after 4 years. In B6 and B7 give the depreciation for years 1 and 2, and in B8 the book value left at the end of year 2.

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Variations of DB

0/3

The same formula in the other shapes it takes at work.

  1. DB Function

    Calculate depreciation using the declining balance method.

    Core
    Advanced
  2. DB for an asset bought part-way through the year

    The month argument shortens the first year.

    Advanced
  3. Book value after two years of DB

    Cost minus each year's depreciation so far.

    Advanced

The data in this exercise

This is the grid you start with. Cell references in the task — B6, C2 — point at the row numbers and column letters below.

8 rows × 2 columns3 cells you fill in
AB
1Cost24000
2Salvage4000
3Life (years)4
4
5
6Year 1
7Year 2
8Book value
What this exercise teachesMay contain the answer

Declining-balance depreciation is heaviest in the early years, so the book value falls fastest at the start — closer to how a vehicle's resale value actually behaves than an equal charge every year. Year 2 is smaller than year 1 because it is a percentage of a smaller balance.