How to Calculate Double-Declining Depreciation Using Microsoft Excel

Depreciation is an accounting practice that has many approaches. The straight line method is the most common, but there are cases where companies want to depreciate an item at a much faster rate. This method is called the double-declining depreciation method. A template for setting this up may be done relatively easily in Excel.

Difficulty: Moderate

Instructions

1. Divide the Excel spreadsheet into two sections. In the first section, set up a formula for the double-declining rate. The second section will be comprised of the depreciation schedule with the number of years in which the item will be depreciated.

2. Enter titles individually in each cell for each of the amounts needed for determining the double declining rate. They include: asset, salvage, asset life is "x" years, depreciation expense, depreciation rate and double depreciation rate. Leave a blank cell to the right of each title for the value amounts.

3. Determine the amount of the asset and enter it in the blank cell. Figure the salvage amount, which is the expected final price of the asset, and enter it in the blank field. Take the asset cost and subtract the salvage rate and divide that by the number of years the item will be depreciated. The Excel formula for the depreciation expense would look like the following: (=9800/5) where 9800 is the asset minus the salvage cost and five is the number of years the item is depreciated.

4. Create formulas for the depreciation rate and the double depreciation rate. The depreciation rate is the depreciation expense divided by the asset cost minus the salvage cost. The double depreciation rate is the depreciation rate multiplied by two. The formula for multiple in Excel uses the "*" symbol.

5. Allow columns for the depreciation balance, depreciation rate and depreciation expense in the second section for the depreciation schedule on the Excel spreadsheet. Enter the asset cost minus the salvage cost in the first cell under the depreciation balance. Enter the double depreciation rate to the right in the next empty cell. The cell to the right of that is a formula that multiplies the first two cells. The formula will look similar to this: (=+B14*C14)

6. Calculate the next remaining balance by subtracting the calculated depreciation expense from the original remaining balance. Continue step five until the original depreciation expense calculated in step three is reached. Once this occurs, go back to the straight line method until balance is zero.