Financial › SLN, DDB122 / 144

Progress is saved on this device. Sign in or sign up free to keep it in your account.

MediumFreeSLNDDB

SLN & DDB: depreciating a printing machine

Bambang runs a printing business in Malang and bought a printing machine for Rp45,000,000. Its useful life is 5 years with a salvage value of Rp5,000,000. His accountant wants to compare the straight-line method with double-declining balance.

Task

Fill in the yearly depreciation table:

B6:B10: straight-line depreciation with SLN.
C6:C10: double-declining balance depreciation with DDB for the year in column A.

The asset data is in B1 (cost), B2 (salvage) and B3 (life). Lock the references so the formulas can be copied down.

Cells to fillB6:B10C6:C10

Required functionsSLNDDB

Expected result

Loading the expected result…

Check answerCtrlShiftEnter
Fill downCtrlD
Previous / next exerciseAlt←→
Leave the workspaceEscTab

Hint 1
SLN(cost, salvage, life) gives the same depreciation every year. DDB(cost, salvage, life, period) needs one more argument: which year.
Hint 2
Lock the asset data with $ ($B$1, $B$2, $B$3), but keep the year A6 relative so it changes as you copy down.
Hint 3
Pattern for C6: =DDB($B$1, $B$2, $B$3, …).

Reveal them one at a time. The last hint nearly gives the answer away.

Give it a try first. The solution unlocks automatically after your first check.

Answer

B6:B10

=SLN($B$1,$B$2,$B$3)

Write it in B6, then fill down to B10.

C6:C10

=DDB($B$1,$B$2,$B$3,A6)

Write it in C6, then fill down to C10.

Explanation

=SLN($B$1,$B$2,$B$3) gives Rp8,000,000 every year. =DDB($B$1,$B$2,$B$3,A6) applies a 2/5 = 40% rate to the book value: Rp18 million in year 1, then Rp10.8 million, Rp6.48 million and so on. In year 5 DDB only takes Rp832 thousand so the book value does not drop below salvage. Both methods total Rp40 million; they only differ in when the cost is expensed.

Starting worksheet: Sheet1
Row	A	B	C
1	Cost	45,000,000
2	Salvage value	5,000,000
3	Useful life (years)	5
4
5	Year	Straight-line (SLN)	Double-declining (DDB)
6	1
7	2
8	3
9	4
10	5
11
12
13
14

Fill in the requested cells, then press Check answer.

Validation result