Variable Declining Balance Depreciation Calculator

Calculator Use

Use this calculator to calculate variable declining balance depreciation. This is a type of calculation allowed under MACRS.

The variable declining balance calculation is a combined method of the Declining Balance Depreciation Calculator and the Straight Line Depreciation Calculator. The depreciation calculation starts with the declining method.  At the period in the life of the asset where the depreciation calculated by the straight line method on the remaining depreciable amount will be greater than the amount calculated by the declining method, you switch to the straight line method for the remainder of the life of the asset.

Inputs

Asset Cost

the original value of your asset or the depreciable cost; the necessary amount expended to get an asset ready for its intended use

Salvage Value

the value of the asset at the end of its useful life; also known as residual value or scrap value

Useful Life

the expected time that the asset will be productive for its expected purpose

Depreciation Factor

this factor is used to calculate the depreciation rate per year. For example, 2 is 200% and commonly called double declining depreciation.

Placed in Service

select the month and enter the year the asset started being used for its intended purpose

Year

enter 1 or 4 digits; enter a four digit year to use your actual years OR enter a 1 to list years using digits 1 through the last year

Fiscal Year

The starting and ending months for your fiscal year, your tax year. For personal tax filing with the IRS, your likely fiscal year is Jan-Dec, a regular calendar year. Some companies may have fiscal years that run, for example, Sep-Aug. The US Government fiscal year is Oct-Sep.

Convention

choose Full-Month, Mid-Month, Mid-Year or Mid-Quarter Convention; if you don't know, keep it at the common Full-Month

Sample Full Depreciation Schedule

Cost: $575,000.00, Salvage: $5,000.00
Life: 10 years, Factor: 2
Convention: Full-Month
First Year: 8 months

Variable Declining Balance Depreciation Formulas

• Declining Balance:
  1. Straight-Line Depreciation Percent = 100% / Useful Life
  2. Depreciation Rate = Depreciation Factor x Straight-Line Depreciation Percent
  3. Depreciation for a Period = Depreciation Rate x Book Value at Beginning of the Period
• Switching to Straight Line Method:
  1. Depreciation in Any Remaining Period = ((Cost - Accumulated Depreciation) / Remaining Life)

Microsoft® Excel® Functions Equivalent: VDB

The Excel equivalent function for Variable Declining Balance Method is VDB(cost, salvage, life, start_period, end_period, factor, no_switch). With it you can calculate depreciation for the chosen period. "factor" defaults to 2, double declining method, and no_switch defaults to FALSE, meaning it will switch to the straight line method when it is advantageous. To fully depreciate just by the double declining method you can use our Double Declining Balance Method Depreciation Calculator.

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