Function DepreciationLinearRate(PurchaseDate, NextPeriodDate, Cost, Salvage, Period, DepreciationRate, Basis)

DepreciationLinearRate

The function DepreciationLinearRate returns the depreciation of an asset for the specified period, using linear depreciation. The accounting periods have a length of one year, but they don’t necessary need to start January 1. The sum of the depreciation amounts of all periods cannot be higher than the difference between the cost and the salvage.

DepreciationLinearRate(
    PurchaseDate,             ! (input) scalar string expression
    NextPeriodDate,           ! (input) scalar string expression
    Cost,                     ! (input) numerical expression
    Salvage,                  ! (input) numerical expression
    Period,                   ! (input) numerical expression
    DepreciationRate,         ! (input) numerical expression
    [Basis]                   ! (optional) numerical expression
    )

Arguments

PurchaseDate

The date of purchase of the asset. PurchaseDate must be given in a date format. This is the first day that there will be depreciated.

NextPeriodDate

The next date after the balance is drawn up. NextPeriodDate must also be in date format. NextPeriodDate is the first day of a new period and must be further in time than PurchaseDate, but not more than one year after PurchaseDate. When NextPeriodDate is an empty string, it will get the default value of January 1st of the next year after purchase.

Cost

The purchase or initial cost of the asset. Cost must be a positive number.

Salvage

The value of the asset at the end of its useful life. Salvage must be a scalar numerical expression in the range \([0, Cost)\).

Period

The period for which you want to compute the depreciation. Period must be a positive integer. Period 1 is the (partial) period from PurchaseDate until NextPeriodDate.

DepreciationRate

The value of the asset declines every period by an amount equal to the depreciation rate times the Cost. DepreciationRate must be a numerical expression in the range \([0, \frac{1}{2})\).

Basis

The day-count basis method to be used. The default is 1.

Return Value

The function DepreciationLinearRate returns the depreciation of an asset for the specified period.

Equation

The method-dependent depreciation \(\tilde{d_i}\) is expressed by the equation

\[\begin{split}\begin{aligned} \tilde{d_1} &=f_{PN}rc\\ \tilde{d_i} &=rc \qquad (i \neq 1) \end{aligned}\end{split}\]

where \(r\) is the depreciation rate.

Note

  • The useful life of the asset is determined by the depreciation rate, and the requirement that the value of the asset can never drop below its salvage value.

  • The function DepreciationLinearRate is similar to the Excel function AMORLINC.

See also

Day count basis methods. General equations for computing depreciations.