MS Excel: AMORDEGRC function for depreciation

The AMORDEGRC function in Excel calculates the depreciation of an asset for each accounting period using a degressive (accelerated) depreciation method.It is mostly used in French accounting systems, where assets lose value faster at the beginning of their useful life.

This method applies a coefficient (acceleration factor) depending on the asset’s useful life.

Syntax

AMORDEGRC(cost, date_purchased, first_period_end, salvage, period, rate, [basis])

Argument	Description
cost	Initial cost of the asset.
date_purchased	The purchase date of the asset.
first_period_end	The end date of the first period.
salvage	The salvage value (residual value after full depreciation).
period	The specific period for which you want to calculate the depreciation.
rate	The rate of depreciation.
basis (Optional)	Day count basis to use (default is 0 – US (NASD) 30/360).

Key Points

• Designed for accelerated depreciation accounting.

• Mainly used for French accounting, but can be useful elsewhere too.

• Depreciation is higher in early periods and decreases over time.

• The function automatically applies an acceleration coefficient:

  • Useful life (years) → Coefficient:

    • < 3 years → 1.5

    • 3–4 years → 2.0

    • 4 years → 2.5

Practical Example

Imagine you bought a machine on January 1, 2024 for $10,000.Its expected salvage value is $1,000, the depreciation rate is 20%, and you want to calculate depreciation for period 1.

The end of the first period is December 31, 2024.

The formula:

=AMORDEGRC(10000, DATE(2024,1,1), DATE(2024,12,31), 1000, 1, 0.2)

Result: Depreciation amount for the first year, calculated using the accelerated method.

Summary

Item	Value
Cost	$10,000
Date Purchased	01-Jan-2024
First Period End	31-Dec-2024
Salvage Value	$1,000
Depreciation Rate	20%
Basis	0 (30/360)

Important Notes

• If the salvage value is greater than the cost, Excel returns a #NUM! error.

• If rate ≤ 0 or period < 0, Excel returns an error.

• The basis allows different date systems (for international needs).

• AMORDEGRC is very similar to AMORLINC, but AMORLINC uses a linear method instead of degressive.

  
  

When to Use AMORDEGRC?

• When assets lose value faster at the beginning (like vehicles, computers, equipment).

• For tax reports requiring accelerated depreciation.

• For French-based accounting standards.

Conclusion

The AMORDEGRC function is an essential tool for financial experts working with accelerated asset depreciation.It allows more realistic modeling of an asset's decreasing value, reflecting its real-world usage and obsolescence faster.