AMORDEGRC – French reducing balance method of depreciation/amortization
Syntax:
=AMORDEGRC(cost,date_purchased,first_period,salvage,period,rate,[basis])
cost: cost of the asset
date_purchased: date at which asset was purchased
first_period: date at which first accounting period close
salvage: residual value of asset at the end of its useful life
period: accounting period for which depreciation is to be calculated
rate: rate of depreciation
basis (optional): basis of year or date system to be used for the purpose of calculation.
Case of hidden application of Depreciation coefficient
Under this method depreciation coefficient is bonded with useful life of asset and the same is applied when this formula is used. Depreciation coefficient is simply an integer by which depreciation is accelerated. User has no control over selection of coefficient in this method as Excel automatically selects it considering the useful life of asset. Summary of this is as follows:
| Useful life | Depreciation Coefficient |
| Less than 3 years | 1 |
| Greater than 3 but less than 5 years | 1.5 |
| Greater than 5 but less than 6 years | 2 |
| Greater than 6 years | 2.5 |
Basis – Basis of year / Date System / Basis of calender
Basis or basis of year is simply the type of calender used by entity. There are many calender basis in use around the world but the ones Excel supports five of them and they are identified by their respective identifier which is optional to be mentioned in calculation while applying this formula. Summary of identifier and their respective calenders are as follows:
| Basis | Calender |
| 0 or omitted | US 30/360 |
| 1 | Actual number of days |
| 2 | Actual number of days within a month but 360 days year |
| 3 | Actual number of days within a month but 465 days year |
| 4 | European 30/360 days |
Example
Step 1: Open tab named AMORDEGRC and observe the data. It has the cost of the asset, date purchase of asset and the date same year ends for accounting purposes. Residual value of asset and the period for which you want to calculate depreciation and rate of depreciation. Basis are optional and you may keep it empty or put in identifier number.
Step 2: In cell B15 put in the following formula:Â =AMORDEGRC(B7,B8,B9,B10,B11,B12,B13) and hit enter. This will give you the depreciation expense for the data provided.
Following is the live worksheet where you can make changes and see results in real time.
