Building a depreciation schedule is a multi-step process, but is not as difficult as it may seem.
Depreciation Schedule Spreadsheet
You can use a spreadsheet program to create a depreciation schedule that calculates the annual depreciation for you, but for instructional purposes we’ll use this Depreciation Schedule spreadsheet we created for you.
Choose a depreciation method
You have several things to consider when selecting a depreciation method. Are there company guidelines you must follow? How about government regulations that dictate the method to use? How will the asset be used, and how quickly will it get used up? Do you need an accelerated method?
Use this Depreciation Consultant to help you decide which method is best.
Calculate your first year’s depreciation
Now that you’ve selected your depreciation method, launch the corresponding Formula Solver from the list below:
- Declining Balance
- Double Declining Balance
- Sum-of-the-Years-Digits Method
- Units-of-Production Method
Plug in the appropriate numbers for asset price, salvage value, etc. and find the depreciation amount for the first year. Put that number in cell D4 of your spreadsheet (the year 1 depreciation amount) and the original asset price in cell C1 (start-of-year book value).
The accumulated depreciation and end-of-year book values will auto-calculate.
Calculate the remaining years’ depreciation
In your Formula Solver, change the number in the “current value” field to the end-of-year book value from your spreadsheet and click the Next button. The Formula Solver will recalculate the depreciation for you — put this new number in the next year’s Depreciation Amount cell on your spreadsheet.
(Note: If you are using the straight line depreciation method, you can forget this part — just copy down the same depreciation amount for as many years as the asset is being depreciated. That’s what straight line is, averaging the depreciation equally over the years. If you are using the sum of the years’ digits depreciation method, change the “year in question” field instead.)
Repeat as needed for the balance of the years.