Microsoft KB Archive/213497

= XL2000: Calculating Depreciation with the Production Method =

Article ID: 213497

Article Last Modified on 11/23/2006

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APPLIES TO


 * Microsoft Excel 2000 Standard Edition

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This article was previously published under Q213497





SUMMARY
Microsoft Excel includes functions to calculate straight line (SLN), sum of the years digits (SYD), and double-declining balance (DDB) depreciation. A fourth depreciation method, the production method, is widely used in business to calculate depreciation on items that can produce discrete units. Items such as vehicles and machinery are most often depreciated in this manner. This article contains a custom function that calculates depreciation using this method.



MORE INFORMATION
Microsoft provides programming examples for illustration only, without warranty either expressed or implied, including, but not limited to, the implied warranties of merchantability and/or fitness for a particular purpose. This article assumes that you are familiar with the programming language being demonstrated and the tools used to create and debug procedures. Microsoft support professionals can help explain the functionality of a particular procedure, but they will not modify these examples to provide added functionality or construct procedures to meet your specific needs. If you have limited programming experience, you may want to contact a Microsoft Certified Partner or the Microsoft fee-based consulting line at (800) 936-5200. For more information about Microsoft Certified Partners, please visit the following Microsoft Web site:

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http://support.microsoft.com/default.aspx?scid=fh;EN-US;CNTACTMS

Example
Suppose you purchase a truck for $25,000, and it has a residual value of $1500. The useful life of the truck is 250,000 miles. During a specific period of operation, you drive the truck 15,000 miles. To calculate the depreciation for that period, follow these steps:   Open a new workbook in Microsoft Excel. Insert a module sheet, and then type the following code: ' Defines the function and the variables.

Function Prod_depr(usage as Double, cost as Double, _  residual_value as Double, useful_life As Double) As Double

' Performs the mathematical computation. Prod_depr = usage * ((cost - residual_value) / useful_life)

End Function  In cell A1 of Sheet1, type the following formula:

=Prod_depr(15000,25000,1500,250000)

The function returns a value of 1410.

NOTE: The arguments for the function are based on the following definitions:
 * Usage is the amount of usage, in units, that the item has received during the depreciation period. This can be measured in miles or hours used.
 * Cost is the original price paid for the item.
 * Residual_value is the estimated salvage or trade-in value.
 * Useful_ life is the planned usage, in units, of the item during its lifetime.

NOTE: It may be easier to type the formula

= usage * ((cost - residual_value) / useful_life

directly into your worksheet if you do not intend to use the custom macro function frequently.

Additional query words: production depreciation XL2000

Keywords: kbdtacode kbhowto kbinfo kbprogramming KB213497

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