MS Excel: VDB function to calculate depreciation of an asset

Fakhriddinbek
May 1
3 min read

When managing assets in financial reporting, depreciation plays a critical role in recognizing the cost of using long-term assets over time. Excel offers multiple depreciation functions, and among them, the VDB function stands out for its flexibility and accuracy in handling partial periods and declining balance depreciation.

Excel screen with two "Function Arguments" windows open, displaying VDB function fields like Cost, Salvage, and Life. Sheet1 is visible below.

The VDB function (Variable Declining Balance) calculates the depreciation of an asset for any given period using the double declining balance method or other declining balance methods. Unlike other depreciation functions (DB, DDB, etc.), VDB allows:

Switching to straight-line depreciation
Calculating partial period depreciation

This makes it ideal for more complex depreciation schedules and financial models.

Syntax

=VDB(cost, salvage, life, start_period, end_period, [factor], [no_switch])

Parameter Details:

Argument	Description
cost	Initial cost of the asset
salvage	Value at the end of the asset’s useful life
life	Useful life of the asset (in the same units as the period arguments)
start_period	Beginning of the period for which depreciation is calculated
end_period	End of the period
factor	(Optional) Rate at which balance declines (default is 2 for double-declining)
no_switch	(Optional) If TRUE, prevents switch to straight-line depreciation

Returns: The amount of depreciation for the specified period range.

Example: Depreciation for a Partial Period

Scenario: An asset costs $10,000, has a salvage value of $1,000, a useful life of 5 years, and you want to calculate depreciation from year 1.5 to year 3 using the double declining balance method.

=VDB(10000, 1000, 5, 1.5, 3)

Result: $2,006.40 (approx.)

This reflects the depreciation from 1.5 years to 3 years, showing how VDB can handle non-integer periods.

How It Works

By default, VDB uses the double declining balance method (factor = 2).
It automatically switches to straight-line when it yields higher depreciation—unless no_switch = TRUE.
It provides more accurate calculations when:
- Assets are acquired mid-year
- You need depreciation between non-whole periods

Use Cases

Use Case	Benefit
Mid-year asset purchases	Supports partial periods
Fixed asset management	More realistic schedules than fixed straight-line
Financial modeling	Switches to straight-line automatically
Tax depreciation modeling	Mirrors methods like MACRS with adjustments

Related Functions

Function	Description
DB	Returns depreciation using the fixed-declining balance method
DDB	Returns depreciation using double-declining balance
SLN	Straight-line depreciation
SYD	Sum-of-years digits depreciation
AMORDEGRC	European method of depreciation (accelerated)

Use VDB when you need the most flexibility and accuracy in modeling asset depreciation, especially when partial years and method-switching are required.

Tips and Best Practices

Tip	Reason
Match time units across inputs	If life is in years, start_period and end_period must be in years too
Use factor = 1.5 for 150% declining balance	Or 2 for double declining (default)
Set no_switch = TRUE to disable SLN transition	For tax scenarios that don’t allow switching
Round or format output	Excel may show long decimals for depreciation amounts

Best Practice: Use ROUND() or TEXT() functions to display cleaner depreciation figures.

Summary Table

Feature	Description
Function Name	VDB
Method Used	Variable declining balance
Supports Partial Periods	✅ Yes
Can Switch to SLN	✅ Yes (unless disabled)
Default Factor	2 (Double-declining)
Best For	Accurate, flexible asset depreciation

Final Thoughts

The VDB function is Excel’s most advanced tool for calculating depreciation. With support for partial periods, automated method switching, and custom factors, it provides financial analysts and accountants the precision needed for real-world asset modeling.