Depreciation Calculator

Part 3 of 3: Depreciation in Excel - Depreciation Calculator

In Part 1 (Depreciation Schedule) and Part 2 (MACRS Depreciation Rate) of

this Depreciation in Excel series, I discussed basic depreciation methods for financial
reporting as well as how to calculate the depreciation rate used in MACRS tables. In
this final part of series, you can download a Depreciation Calculator that implements
all the methods discussed in these previous articles, including straight-
line depreciation, sum-of-years' digits, and declining-balance.

Description

This Depreciation Calculator spreadsheet was designed to demonstrate how to

perform various depreciation calculations for a variety of depreciation methods. It is not
intended to be used for official financial or tax reporting purposes.

The workbook contains 3 worksheets:

1. Basic Depreciation Calculator: This calculator uses the same formulas used in
the Depreciation Schedule, where depreciation is calculated without using the MACRS
half-year, mid-quarter, or mid-month conventions.

2. MACRS Depreciation Rate Calculator: This depreciation calculator uses the

approach I discussed in Part 2, where the depreciation rate is calculated instead of
looking up the rates in the MACRS tables.

3. MACRS Depreciation Calculator: This calculator uses what I refer to as the

"Depreciation Basis Reduction" approach. I wouldn't call it an "official" MACRS
depreciation calculator, but it is set up to work as outlined in the IRS
publication (see "Figuring the Deduction Without Using the Tables"). It allows
adjustments to be made to the depreciation basis due to losses or improvements.

Before using the MACRS depreciation calculators, you should read through How to
Depreciate Property: IRS Publication 946.
Using the Depreciation Calculator
Before using the depreciation calculator, please refer to the previous articles which
explain the formulas and various depreciation methods:

 Part 1: Depreciation Methods and Formulas for Financial Reporting in Excel

 Part 2: How to Calculate the Depreciation Rate in the MACRS Tables Using Excel

Each of the 3 worksheets in the depreciation calculator workbook creates a depreciation

schedule showing the depreciation allowance for the year j (Dj), the accumulated
depreciation, and the book value at the end of the year (BVj).

Important: The straight-line depreciation (SL) and declining-balance depreciation (DB)

methods used in the MACRS depreciation calculators are different than those in the
Basic Depreciation Calculator due to the use of the half-year, mid-quarter, and mid-
month conventions.

Depreciation Calculation Resources

 How to Depreciate Property, IRS Publication 946 at IRS.gov.

Share Our Depreciation Calculator

To reference this page on your website or blog, use an in-line link to the Depreciation
Calculator as I have just done in this sentence, or use something similar to the following citation:

- Wittwer, J.W., "Depreciation in Excel: Part 3 - Depreciation Calculator,"

From Vertex42.com. Oct 19, 2009.

Disclaimer: This spreadsheet and the information on this page is for illustrative and educational purposes only.
We do not guarantee the results. You should seek the advice of qualified professionals regarding depreciation.