Depreciation Formula in Excel

What this does

Depreciation spreads the cost of an asset across the years it is used, so each period carries a fair share of the expense instead of one big hit at purchase. Straight-line (SLN) charges the same amount every year; declining-balance (DDB) front-loads the expense, matching assets that lose most value early, like vehicles and laptops. Most people learn this as a sequence of clicks and forget it by next week; learning it as a pattern instead is what lets you apply it to the next, slightly different version of the problem without starting from scratch. That is the difference this page is trying to make. For “depreciation formula in excel”, the reliable version is a short checking loop, not just the first command that appears to work. Run it on a deliberately small range first, watch how the affected formula change, and only then apply the same setup to the full sheet. When a formula is involved, keep the inputs labelled beside it, reference cells instead of typing values, and apply number formatting only after the result checks out. That is what makes a calculation you can defend to a CFO or an auditor useful in real work: repeatable, auditable, and not dependent on memory or luck.

A worked example

A €10,000 machine with a €2,000 salvage value and a 5-year life depreciates by =SLN(10000,2000,5) = €1,600 every year under straight-line. Switch to declining balance and the first-year charge is larger — €4,000 — then tapers. The table and book-value curve above redraw the whole schedule as you change any input. You need a depreciation schedule for any fixed-asset register, a capex budget, or a P&L that has to match expense to the period that benefited. It is core to both management reporting and tax compliance. A practical tip before you scale it up: build it once on a small block of test data, confirm the number against the tool on this page, and only then point it at your real sheet. That one habit catches almost every mistake while it is still cheap to fix, long before a wrong figure reaches a report or a colleague.

In Google Sheets

If you are in Google Sheets rather than Excel, the good news is that the formula shown here is identical and the workflow barely changes — menus sit across the top instead of in a ribbon, and a few function names differ slightly, but anything you build here moves across with little or no rework. Nothing on this page is behind a login: the tool runs entirely in your browser, the formula is shown in full with one-click copy, and the steps work the same on Windows and Mac. That is the whole promise here — the exact answer, a way to prove it on your own numbers, and just enough context to make it stick. The short version of “depreciation formula in excel”: the answer is at the top of this page, the tool proves it on your own numbers, and the sections above explain why it holds so the next variation does not stump you. Excel rewards people who reference cells instead of typing values and who keep inputs separate from formulas, because that is what makes a result you can audit months later. Build it once, deliberately, with the live tool as a check, and you convert a one-off lookup into a reusable skill — which is the whole point of learning the why and not just the what.

Common mistakes

• Forgetting the salvage value, which over-depreciates the asset below its real residual worth.
• Mixing methods within one schedule, so the totals no longer reconcile.
• Using DDB without a period argument that increments each year.
• Confusing accounting depreciation with the tax schedule your jurisdiction actually requires.

Frequently asked questions