The reason is that, as we drag the formula down, we want the cell for the period to move down to the next period and so on. We are going to copy this formula down as we did above with straight- line depreciation, so we will, again, include absolute references ( $) in front of the columns and rows of the cells, except for the cell describing the argument per. Again, the cost is listed in cell C2 salvage is listed in cell C3 life, in periods of time, is listed in cell C4 and per is listed in cell A8. The arguments to define are cost, salvage, life, and per. The formula for sum- of- years' digits depreciation is created in cell D8. Drag this formula down to populate cells C9 through C12. For this example, the formula we want to enter in cell C8 is =SLN($C$2,$C$3,$C$4). Because we are going to copy the formula down so that it calculates the straight- line depreciation for all periods, we will include absolute references ( $) in front of the columns and rows of those cells. The cost is listed in cell C2 (50,000) salvage is listed in cell C3 (10,000) and life, for this formula, is the life in periods of time and is listed in cell C4 in years (5). We need to define the cost, salvage, and life arguments for the SLN function. Let's create the formula for straight- line depreciation in cell C8 (do this on the first tab in the Excel workbook if you are following along). Our job is to create a depreciation schedule for the asset using all four types of depreciation. Assume that our company has an asset with an initial cost of $50,000, a salvage value of $10,000, and a useful life of five years and 3,000 units, as shown in the screenshot below. Let's go through an example using the four methods of depreciation described so far. Depreciation example with first four functions If it is left blank, Excel will assume the factor is 2 - the straight- line depreciation rate times two, which is double- declining- balance depreciation. The fifth argument, factor, is optional and determines by what factor to multiply the rate of depreciation. The first four ( cost, salvage, life, and period) are required and the same as used in the DB function. The DDB function is used for calculating double- declining- balance depreciation (or some other factor of declining- balance depreciation) and contains five arguments. If it is left blank, Excel will assume there were 12 months in the first year. The optional argument, month, refers to the number of months in the first year. As with per in the SYD function, the unit used for the period must be the same as the unit used for the life e.g., years, months, etc. Period is required and represents the period to calculate the depreciation. The first four arguments are required, and the last one is optional. The DB function is used for calculating fixed declining- balance depreciation and contains five arguments: cost, salvage, life, period, and month. The unit used for the period must be the same as the unit used for the life e.g., years, months, etc. The syntax is =SYD(cost, salvage, life, per) with per defined as the period to calculate the depreciation. The SYD function calculates the sum- of- years' digits depreciation and adds a fourth required argument, per. Those three arguments are the only ones used by the SLN function, which calculates straight- line depreciation.
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