Use Of Datedif

Use Of Datedif

			Purchase Price :		£5,000
			Life in Years :		5
			Salvage value :		£200
			Year		Deprecation
			1		£2,375.00		=DB(E3,E5,E4,D8)
			2		£1,246.88		=DB(E3,E5,E4,D9)
			3		£654.61		=DB(E3,E5,E4,D10)
			4		£343.67		=DB(E3,E5,E4,D11)
			5		£180.43		=DB(E3,E5,E4,D12)
			Total Depreciation :		£4,800.58		* See example 4 below.
	What Does It Do ?
This function calculates deprecation based upon a fixed percentage.
The first year is depreciated by the fixed percentage.
The second year uses the same percentage, but uses the original value of the item less
the first years depreciation.
Any subsequent years use the same percentage, using the original value of the item less
the depreciation of the previous years.
The percentage used in the depreciation is not set by the user, the function calculates
the necessary percentage, which will be vary based upon the values inputted by the user.
An additional feature of this function is the ability to take into account when the item was
originally purchased.
If the item was purchased part way through the financial year, the first years depreciation
will be based on the remaining part of the year.
Syntax
=DB(PurchasePrice,SalvageValue,Life,PeriodToCalculate,FirstYearMonth)
The FirstYearMonth is the month in which the item was purchased during the
first financial year. This is an optional value, if it not used the function will assume 12 as
the value.
Formatting
No special formatting is needed.
Example 1
This example shows the percentage used in the depreciation.
Year 1 depreciation is based upon the original Purchase Price alone.
Year 2 depreciation is based upon the original Purchase Price minus Year 1 deprecation.
Year 3 deprecation is based upon original Purchase Price minus Year 1 + Year 2 deprecation.
The % Deprc has been calculated purely to demonstrate what % is being used.
			Purchase Price :		£5,000
			Salvage value :		£1,000
			Life in Years :		5
			Year		Deprecation				% Deprc
			1		£1,375.00				27.50%
			2		£996.88				27.50%
			3		£722.73				27.50%
			4		£523.98				27.50%
			5		£379.89				27.50%
					=DB(E47,E48,E49,D56)
			Total Depreciation :		£3,998.48
Example 2
This example is similar to the previous, with the exception of the deprecation being calculated
on a monthly basis. This has been done by multiplying the years by 12.
			Purchase Price :		£5,000
			Life in Years :		£5
			Salvage value :		100
			Month		Deprecation
			56		£8.79
			57		£8.24
			58		£7.72
			59		£7.23
			60		£6.78
					=DB(E66,E68,E67*12,D75)
Example 3
This example shows how the length of the first years ownership has been taken into account.
			Purchase Price :		£5,000
			Life in Years :		5
			Salvage value :		£1,000
			First Year Ownership In Months :		6
			Year		Deprecation				% Deprc
			1		£687.50				13.75%
			2		£1,185.94				27.50%
			3		£859.80				27.50%
			4		£623.36				27.50%
			5		£451.93				27.50%
					=DB(E74,E76,E75,D84,E77)
			Total Depreciation :		£3,808.54
Why Is The Answer Wrong ?
In all of the examples above the total depreceation may not be exactly the expected value.
This is due to the way in which the percentage value for the depreceation has been calculated
by the =DB() fumction.
The percentage rate is calculated by Execl using the formula = 1 - ((salvage / cost) ^ (1 / life)).
The result of this calculation is then rounded to three decimal places.
Although this rounding may only make a minor change to the percentage rate, when applied
to large values, the differnce is compounded resulting in what could be considered as
approximate values for the the depreceation.
Example 4
This example has been created with both the Excel calculated percentage and the 'real'
percentage calculated manually.
The Excel Deprecation uses the =DB() function.
The Real Deprecation uses a manual calculation.
							This is the 'real' deprecation percentage, calculated manually :		27.522034%
									=1-((E117/E116)^(1/E118))
			Purchase Price :		£5,000				= 1 - ((salvage / cost) ^ (1 / life)).
			Salvage value :		£1,000
			Life in Years :		5
			Year		Excel Deprecation		Real Depreciation				Excel % Deprc
			1		£1,375.0000		£1,376.1017				27.500%
			2		£996.8750		£997.3705				27.500%
			3		£722.7344		£722.8739				27.500%
			4		£523.9824		£523.9243				27.500%
			5		£379.8873		£379.7297				27.500%
			Total Depreciation :		£3,998.48		£4,000.00
					Error difference :		£1.52

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