Financial Functions
Advanced

DB for an asset bought part-way through the year

The month argument shortens the first year.

Task:

A machine costing 30,000, with a salvage value of 3,000 after 5 years, was bought at the start of July, so only 6 months fall in the first financial year. In B6 give the first year's depreciation.

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Variations of DB

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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.

6 rows × 2 columns1 cell you fill in
AB
1Cost30000
2Salvage3000
3Life (years)5
4Months in year 16
5
6Year 1 depreciation
What this exercise teachesMay contain the answer

Charging a full year's depreciation on an asset owned for six months overstates the expense. The month argument pro-rates the first year, and DB carries the remainder into the later years so the asset still ends at its salvage value.