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In this lesson we will go through the VDB method of calculating depreciation.
It stands for Variable Declaring Balance, and uses the DDB method by default.
What differs VDB from DDB, however, is that VDB switched to the Straight Line method towards the end of the periods in order to make sure that the residual value is reached.
We’ll write equals, VDB, select the cost, Residual value, and years, making them all absolute.
We will then need to specify the start- and end periods.
We would like for each number to review its own period, so we’ll want it to start at the end of the previous period, and end at the beginning of the current one.
So we’ll select the period to the left, subtract one, and then select the period again as the end period.
If we would like, we can also specify the factor, and the whether or not we would like for the Straight line method to actually take over, but we will be ignoring it for now.
We’ll copy down, and see that the last two values are the same.
This is when the Straight Line Method takes over and makes sure that the residual value to the left is reached.
We’ll insert a graph to assess the curvature of the line.
In this lesson we have taken a look at the depreciation function VDB.